Key Elements Of Marketing And Advertising

BUSINESS MARKETING—Marketing and advertising work for relatively low-priced products with mass appeal but lack any method of viral distribution.

Here some examples of marketing and advertising

EXAMPLES OF COMPANIES

1. PROCTER & GAMBLE—Procter & Gamble can’t afford to pay salespeople to go door-to-door selling laundry detergent. P&G does employ salespeople to talk to grocery chains, and large retail outlets since one detergent sale made to these buyers might mean 100,000 one-gallon bottles.

LESSON LEARNT—

■ To reach its end-user, a packaged goods company has to produce television commercials, print coupons in newspapers, and design its product boxes to attract attention.

■Advertising can work for startups, too, but only when your customer acquisition costs and customer lifetime value make every other distribution channel uneconomical.

2. WARBY PARKER — Consider Warby Parker, an e-commerce startup, which designs and sells fashionable prescription eyeglasses online instead of contracting sales out to retail eyewear distributors. Each pair starts at around $100, so assuming the average customer buys a few teams in her lifetime, the company’s CLV is a few hundred dollars. That’s too little to justify personal attention on every transaction, but at the other extreme, hundred-dollar physical products don’t exactly go viral by running advertisements and creating quirky TV commercials.

LESSON LEARNT—

■Warby can get its better, less expensive offerings in front of millions of eyeglass-wearing customers. The company states plainly on its website that “TV is a great big megaphone,” and when you can only afford to spend dozens of dollars acquiring a new customer, you need the most giant megaphone you can find.

■Every entrepreneur envies a recognizable ad campaign, but startups should resist the temptation to compete with more prominent companies in the endless contest to put on the most memorable TV spots or the most elaborate PR stunts. We know this from experience.

3. PAY PAL— PayPal hired James Doohan, who played Scotty on Star Trek, to be their official spokesman. When they released their first software for the PalmPilot, they invited journalists to an event where they could hear James recite this immortal line: “I’ve been beaming people up to my whole career, but this is the first time I’ve ever been able to beam money!” It flopped—the few who actually came to cover the event weren’t impressed.

Then they thought Scotty the Chief Engineer could speak with more authority than, say, Captain Kirk. They were again wrong.

Priceline.com cast William Shatner in a famous series of TV spots; it worked for them. But by then, Priceline was a significant player. No early-stage startup can match big companies’ advertising budgets. Captain Kirk truly is in a league of his own.