3 marketing fundamentals entrepreneurs should know

Marketing has always been the backbone of any business. Over the last 150 years, marketing has evolved from being production-led to becoming customer-led. A classic example of a production-led marketing approach is Henry Ford’s quote. He said, “Any customer can have a car painted any colour that he wants, so long as it is black”. In today’s world, there are very few examples of products where customers do not have a choice. Most products have a variety of options to suit the needs of different customers. Even the way that the product is marketed is dependent on who it is being marketed to.

The role of marketing in today’s era is to build long-term relationships with customers. These relationships provide sustained growth and build a loyal fan-base. However, first-time entrepreneurs may lack these marketing skills that are required to grow their business. From my experiences of becoming an entrepreneur, I share with you the 3 essential marketing fundamentals you need to know before you jump into entrepreneurship.

Marketing a business in the digital world

According to a small survey done by a startup called Xeler8 (now acquired by ZDream Ventures) in 2016, the average entrepreneurship profile at that time was of a male (92%) aged 28-29 years old, who was more likely to be a graduate (47%) or a postgraduate (38%) from a non-premier institution like IIT or IIM. Unlike the past, where entrepreneurship was limited to business families who had prior experience and financial backing, many of the new generation entrepreneurs are first-time business owners and rely on their own funds or external investments. In this scenario, many new-age entrepreneurs acquire the necessary business skills on the job.

I was one such first-time entrepreneur (though from the smaller pool of 8% female entrepreneurs), who took the plunge in 2015 after an automotive engineering career of 10+ years across countries. As a first-time entrepreneur, I had a very steep learning curve in all aspects of running a business. But the one that stood out the most for me was marketing. Over the years of working for my own venture, I realised that marketing can make or break the business, even if the product is great. This is because of the fundamental shift in consumer behaviour.

Firstly, the liberalisation of the economy and the omnipresence of the internet has given today’s customers a plethora of options to choose from. This has made them more discerning in their purchases. They conduct their own online research before they buy, especially when faced with a niche need. This research can take the form of peer reviews, third-party comparisons, etc. about the company or product.

Secondly, customers are bombarded with ads from multiple sources now, not just TV, print and radio. Ads appear in online searches, websites, streaming apps, mobile apps and SMS. These ads are more affordable for the marketer than traditional channels and are able to target specific demographics of customers. While this is great for the business, it has made the customer wary of paid advertising. Customers have ad-blindness while browsing sites and social media feeds. On an average, only 2-10% of the customers click an ad. This makes it very hard to catch the attention of someone enough to make a sale.

Thirdly, customers have limited time and attention span. A study by Microsoft found that the human attention span has reduced from 12 seconds in 2000 to 8 seconds now. Customers lose interest quickly and do not have the time for a long marketing pitch.

These shifts in customer behaviour have prompted changes to the way businesses approach marketing. Let us look at the essential marketing fundamentals that an entrepreneur must know.

Top 3 marketing fundamentals for entrepreneurs

1. Sell an idea, not a product: Many startups have a revolutionary product or service that is solving a need of a customer. These needs may be large-scale – in which case the product finds exponential success – or it may be niche. When the business is solving a niche need, it becomes challenging to find the right audience. The startup may be able to reach out to a large demographic through marketing campaigns, but will have poor conversion. Hence, the focus of every startup should be to talk about the need that is being addressed. This way, the audience knows instantly whether the product is for them or not. And if the audience identifies with the need, then the product is an instant connect.

Even when we look at traditional industries like food & beverages that solve large scale needs, there exist niche products that are organic, locally-sourced or made of certain ingredients that are beneficial for a specific group of people. Hence, the marketing campaigns should be focussed on how these products benefit that specific customer. Once that is understood and accepted by the customer, the pricing conversation becomes easier.

A second way to connect with the intended audience is through emotions. Many startups that are benefitting communities through their products use this approach. They may be working with marginalised sections of a commnunity or working towards improving society. Here the marketing should focus on the impact that the startup is able to make. Emotional connect is the strongest connect with a customer and builds a long term relationship.

2. Know the benchmarks for your industry: A common mistake that entrepreneurs make is underestimating how many leads they need to reach out to. To avoid this mistake, do some research on the benchmarks for your industry. This will give you an idea of what kind of pipeline of leads you need to generate. For e.g. the benchmark for apparel websites was 4.2% in 2019 (SmartInsights). To get more than 4 people to buy the product, 100 people need to visit that specific webpage. At the initial stage of the business - when the business is unknown to the general public - generating more than this volume of traffic should be the focus. Whether through paid ads or organic means, the goal should be to get as many people to visit your website as possible.

Industry benchmarks are available for specific channels, sources, devices and even different stages of the funnel. If we stick with the e-commerce example, the benchmark for conversions through paid ads is 2.6%, but 3.0% when the brand is referred by someone. Similarly, desktops convert only 25% people, while mobiles convert over 30%. Depending on the purchasing stage of the consumer, the conversion rates differ. Nearly 50% of the people navigate from an ecommerce category page to a specific product’s page, but only 33% of those add products to their cart.

Benchmarks give you a reality check of the revenue you can generate, against your marketing spend. Before starting any campaign, take the time to research the results you can expect.

3. Customers need convincing to buy from a new brand: According to a study by Harvard Business School, it takes 6 interactions with a brand for a consumer to make a purchase. This number is 13 for when the brand is a B2B company. Newer brands are at a disadvantage because the consumers do not trust the brand yet. So, multiple interactions are required to build that trust in the brand.

These interactions can take any form – offline or online – but are true for the average consumer. There will always be consumers who make snap purchase decisions, but a business should not rely on those to grow. An average consumer will take time to buy something, for the reasons I mentioned earlier.

So what can a brand do? This is where multi-channel marketing comes in. A business should identify the sources that their consumers favour. For e.g. if a business is targeting the 30-45 age group, sources like Google search, LinkedIn, Facebook, offline events and PR articles will be most useful. If the business was targeting the 18-25 age groups, then this mix changes to Google search, Instagram, Snapchat, YouTube and Facebook. Identify the source mix where your consumers are and create content for that source. The content across sources should be consistent so that it can be identified with your brand. Use the same tone of voice, brand colours and graphics to maintain that consistency.

The first year of any new business is the most crucial. New businesses need to invest more in marketing in the early stages to generate brand awareness, which will result in long-term sales. These 3 marketing fundamentals will help a first-time entrepreneur step into the entrepreneurship world with confidence.