186 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
You can decide, up front, your marketing orientation. Your marketing
orientation will strongly inuence your culture and promotional behavior. As
Table9.2 shows, there are four recognized orientations.
9.3.1 The Promise of Unmet Needs/Wants
“Ideas, products, messages and behaviors spread just like viruses
do.” —Malcolm Gladwell, The Tipping Point
Successful startups are those rms that can recognize and respond to unmet
needs/demands in the market. Unmet needs/demands are plentiful, such as
cure for cancer and heart disease, non-polluting cars, green and sustainable
agriculture, desalination of seawater, wireless communications, etc. However,
you can analyze your markets all you want, but some parameters will be
uncontrollable, such as:
◾ Demographic trends
◾ Competitive technologies
◾ Political/legal environment
◾ National income
Startups need to avoid marketing myopia. Marketing myopia is manage-
ment’s inability to recognize the scope of its business. To avoid marketing
myopia, startups must broadly dene their strategic goals, and concentrate
on universal customer needs/wants, as depicted in Table9.3.
Table9.2 Strategic Orientations
1. Market orientation
Based on the customer’s perceived
values, needs/wants/demands. Focuses
on delivering superior customer
relationship.
2. Sales orientation
The sales approach stresses those
products that the organization can
best produce at the most competitive
price.
3. Production orientation
Focuses on the internal manufacturing
capability and resources of the rm to
manufacture quality products.
4. Societal orientation
A philosophical stance that focuses on
preserving or enhancing individual’s
or society’s long-term interest’s.
Marketing and Sales ◾ 187
9.3.2 Costs and Functions of Marketing
Marketing creates utility (wants/needs/demands satisfying power) through
the selling process. The American Marketing Association denes marketing
as “An organizational function and set of processes for creating, communi-
cating and delivering value to customers and for managing customer rela-
tionships in ways that benet the organization and its stakeholders.” Using
this broad denition, we can enumerate the eight costs and functions of
marketing, as shown in Table9.4.
Table9.3 Avoiding Marketing Myopia
Company Myopic Description Benets Description
Apple We are in the device
business.
We are in the wireless
business.
JetBlue Airways We are in the airline
business.
We are in the affordable-
transportation business.
Morgan Stanley We are in the brokerage
business.
We are in the nancial
services business.
Revlon We are in the cosmetics
business.
We are in the “hope”
business.
Table9.4 Costs and Functions of Marketing
7
1. Buying Ensuring product availability to meet market demands
2. Selling Personal contacts, technical support, follow-up, product
literature
3. Standardization Ensuring quality control and quality assurance for all
offerings
Meeting or exceeding world quality standards
4. Financial assistance Providing credit, appropriate payment schedules,
referrals
5. Storage Maintaining warehouse facilities to ensure timely
deliveries
6. Transportation Facilitating the delivery of product from production sites
to purchasers
7. Market information Collecting, analyzing, and acting on market dynamics
8. Risk taking Managing market uncertainty and future customer
demands
188 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
9.4 Pioneering StartUps
“There are known knowns. There are known unknowns. But there
are also unknown unknowns.” —Donald Rumsfeld
Introducing a product that is new to both the rm and the market requires
the greatest expenditure of both effort and resources, thus representing
the greatest uncertainty and risk. The marketing challenge is twofold: (1)
communicating the product/service availability and (2) persuading the
early adopters.
Figure9.4 is the classical adoption cycle that accompanies any innovation
into the market. The entrepreneur’s marketing challenge is to quickly move
from the innovator/early adopter cycle to the majority of customers.
As the gure shows, the early market consists of the innovators or
techies who are eager to be at the forefront of any technology, and make
a name for themselves if it is proven successful. For the visionaries, the
technology represents a change agent, and they are the champions of
change and set the standards. For the pragmatists, improving technol-
ogy is their priority—they want “evolution not revolution.” The conserva-
tives wait until a platform or application becomes the de facto industry
standard, and are price-sensitive and very demanding. The laggards
Adoption Cycle
Innovators
Early
adopters
Majority
Pragmatists Conservatives
Late
majority
Laggards
Visionaries
Time
Introduction
Figure 9.4 Adoption cycle—The classical adoption cycle that accompanies innova-
tive entries.
Marketing and Sales ◾ 189
(risk allergic) wait for turnkey applications with guaranteed results and
no surprises.
9.4.1 Crossing the “Chasm”
“If people don’t want to come out to the ballpark, who is going to
stop them?” —Yogi Berra
For any startup, crossing the chasm, that is, becoming the industry standard
and becoming protable, is its most pressing strategic goal. To accomplish
that goal, the rm must persuade the pragmatists to adopt their product/
service. Pragmatists demand a total solution to their problem (“pain”); they
want the whole product. The whole product is dened as the minimum
set of market requirements to compel a radical change and achieve market
superiority.
Crossing the chasm is the whole enchilada. The “chasm” concept is visu-
ally presented in Figure9.5.
e Early
Market
Innovator
s
Visionaries
e Mainstream
Market
Pragmatists
Conser
vatives
Laggards
e chasm
Going from loss to protability
Inuencers
Bulk of revenues and prots
e
dreaded
“Chasm”
(?)
Company
becomes market leader
Figure 9.5 The chasm—Becoming the industry standard and reaching protability.
190 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
9.4.2 Your Pioneer Strategy
“Pioneers are the ones with the tomahawks on their backs.”
Question: How can a startup aspire to become a market leader in the phase
of gigantic competition? Answer: By the marketing concept of a pioneer
strategy.
Marketing gurus have long debated the following conundrum: “Is it better
to be a pioneer or a follower?” Potential sources of competitive advantage
available to pioneers are:
◾ First mover advantage
◾ First choice of market segmentation
◾ Dening the rules of standardization
◾ Early distribution advantage
◾ Setting prices (optimizing margins and revenues)
◾ Creating high barriers to entry
In spite of these early entry advantages, many pioneers fail to capitalize
on their potential by abandoning the product, going out of business, or
being acquired before their product matures. Followers have the ability to:
◾ Exploit any pioneer mistakes (product, marketing, technical)
◾ Use more advanced technologies
◾ Exploit the pioneer’s limited nancial resources
◾ Skim the market (cherry pick)
◾ Compete on lower price, greater availability, superior technical support
9.5 Setting the Right Price
“You don’t sell through price. You sell the price.”
Setting the “right” price for your innovative product is one of the most cru-
cial marketing decisions you will ever face. Too high a price and it will not
sell; too low a price and you will be out of business. Meeting the price of
existing products is the easiest pricing goal to implement. However, how do
you price an innovative product/service because by denition it does not
currently exist in the market?
Pricing must be thought of in terms of the product and adoption life
cycle. Keep in mind that pricing is the only part of the marketing mix that
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