You had a bright business idea, chased up several seed fund providers until you found the one who put the highest buck on the value of your business, and then got down to materializing your concepts.
Now you have set shop and want the customers to make a beeline for it. Simple reasoning says you must let them know about your business or product and where they can find you. In other words, you have to market your business.
There are two traditional ways to pay for marketing: engage an advertising agency on commission basis or pay retainers (flat fees) to media owners. Ideally, the entrepreneur should choose neither. Marketers say that out of $100 spent on marketing, $50 typically suffices; but it is often difficult to identify the successful placement of that $50.
If you're pushing hard for razor-thin margins, a start-up should abstain from the temptation of high-glam, big-budget marketing activity. Ironically, high advertising spending by a start-up often creates a negative impression in the minds of the customers; possibly because they suspect such extensive advertising is designed to hide some inefficiency in the product. A start-up requires a marketing strategy customized to suit its philosophy and optimized to suit its budget. Let us explore a few pointers on this issue:
Frame your Unique Selling Proposition (USP). Marketing starts with a statement: a tag-line, a punch-line, a vision, an all-encompassing succinct statement that projects the best in your business. You should have a sustainable competitive advantage, or a unique addition to market. Frame and re-frame this philosophy and integrate it into your product design. The first product running out of your stores should have the essence of this strength writ large on it.
Create your own ads. Suppose you are a business that sells memorabilia only to alumni of prestigious educational institutes, and the crux of your business lies in the effort and research you invest for understanding the institute culture. A media company can generate a sepia-colored ad of a celebrity holding an old guitar; but can they explain the uniqueness of your business? Perhaps better than any ad agency, you have the knowledge of how to win a customer's favor. You don't need to feature a Hollywood star or NBA champ in your ads. A simple mailer or brochure clearly stating your strengths and offerings is enough for a targeted customer. Not everyone who's got it, flaunts it. Starbucks, Google, Yahoo, and Hard Rock Cafe are some businesses that hardly spent anything on marketing during their early days.
Distribute your own ads. Unless your business is to run a TV channel or radio station, the most cost-effective way to distribute your ads would be the Internet. It would be best to be well-versed with SEM, SEO and SMS. Better yet, hand deliver your business communication to at least draw the first dozen customers. Make an elevator pitch when possible: present your company to a potential customer in a concise, straightforward manner that emphasizes your key points, as if you only had an elevator's ride with them.
Let the customer do the marketing. The first satisfied customer spreads the word about your business. No start-up can survive until it has started a customer chain reaction. This is one inviolable statement for start-ups. Brand loyalty can be expected when there is community-wide pride in owning the brand. Enthusiastic customers create this pride. Viral marketing is so effective for start-ups that you may almost wish to pay for the good it does.
Get repeat orders. Realistically speaking, your product might not carry the punch that knocks the customer off his feet, so it is important to follow up and listen to feedback. Incorporate constructive criticism into your business to make a successful second sale for that same customer. Create lifetime loyalty.
If all these still don't set the cash registers ringing, then go to the labs. You have delighted your customers with the human touch. If they still aren't buying, it doesn't necessarily mean you should start looking for that big-banner ad agency. You just need to go back to your labs; the product needs to be refined. Reasons for not doing well could be varied; the market may not have understood the product concept, some better-known brand sells your product for the same price, or the product intrinsically lacks value. Only a customer survey can tell you what exactly is wrong.
Start-ups are about experimentation and improvisation. It would ultimately be desirable if such marketing tactics could be done without draining precious dollars in the name of glamorous marketing activity — unless that is the route you prefer.