Special Issue in Marketing: Startup Marketing Group 3: Leave Behind Nicholas Clar, Jonathan Etheart,...

Special Issue in Marketing: Startup Marketing

Group 3: Leave BehindNicholas Clar, Jonathan Etheart, Carly Israel, Anjuli

Lochan & Isaac Sutton

Startup Marketing ChallengesSecondary Research

• Many startup companies fail for a variety of reasons

• In the first quarter of 2010 there was a net loss of 96,000 small companies; in 2009, the net loss was 400,0001

Source: ZIMMERMAN, EILENE. "How Six Companies Failed to Survive 2010." New York Times. 5 Jan. 2011. Web. <http://www.nytimes.com/2011/01/06/business/smallbusiness/06sbiz.html?ref=smallbusiness>.

Nicholas Clar, Jonathan Etheart, Carly Israel, Anjuli Lochan & Isaac Sutton

Startup Marketing ChallengesSecondary Research Cont’d.

• According to the New York Times Article, “How Six Companies Failed to Survive 2010”, there are several trends that surround startup marketing issues and challenges that small companies face in general.

• The article considers six different small, startup companies, where it was at its peak and what went wrong.

• Some of these challenges, which we will summarize in further detail, range from steep competition to financial obstacles

Source: ZIMMERMAN, EILENE. "How Six Companies Failed to Survive 2010." New York Times. 5 Jan. 2011. Web. <http://www.nytimes.com/2011/01/06/business/smallbusiness/06sbiz.html?

ref=smallbusiness>.Nicholas Clar, Jonathan Etheart, Carly Israel, Anjuli Lochan & Isaac Sutton

Startup Marketing Challenges6 Companies Summarized

• Wesabe’s Challenge• Competitor, Mint.com, entered the market and with a better name, design, and ease of

use, stole their consumer base

• Gotham Concierge’s Challenge• External forces (stock market/home price trouble) led to client cut-back. This, coupled

with ineffective excess marketing efforts, made for financial troubles

• iParents.com’s Challenge• Too much money was spent on enhanced functionality; in the words of

entrepreneur/founder Don Milley, “All the bells and whistles diluted our premise…

• Large Format Digital’s Challenge• Poor financial decisions coupled with the external environmental forces like the

bankruptcy filing of Lehman Brothers

• Varvitsiotis Architecture’s Challenge• External forces like the stock market fall led to clients canceling projects;

increased competition then led to their ultimate failure

• Petite Palate’s Challenge• Could not secure investors and had difficulty getting products to their market

Source: ZIMMERMAN, EILENE. "How Six Companies Failed to Survive 2010." New York Times. 5 Jan. 2011. Web. <http://www.nytimes.com/2011/01/06/business/smallbusiness/06sbiz.html?

ref=smallbusiness>.Nicholas Clar, Jonathan Etheart, Carly Israel, Anjuli Lochan & Isaac Sutton

Startup Marketing ChallengesCommon Mistakes

• According to a Fast Company Article, entitled “10 Common Mistakes that Startups and Small Companies Make”, startups have small margins for error.

• The article summarizes 10 key mistakes that startups make; if made early on, it is possible that the company, like the ones discussed in the NYT article, will fail

Source: Lavenda, David. "10 Common Mistakes That Startup and Small Companies Make | Fast Company." FastCompany. 8 Sept. 2009. <http://www.fastcompany.com/blog/david-lavenda/whatever-it-takes/10-common-mistakes-startupsmall-companies-make>.Nicholas Clar, Jonathan Etheart, Carly Israel, Anjuli Lochan &

Isaac Sutton

Startup Marketing ChallengesCommon Mistakes Cont’d.

• Overestimating Enthusiasm for Product/Service

• Not Validating Market Demand

• Not Engaging With Consumers Early Enough

• Overestimating Product/Service’s Uniqueness

• Underestimating Effort Needed to Build Product

• Hiring Wrong People

• Not Focusing

• Not Pricing Correctly

• Not Having Long-term Vision that ScalesSource: Lavenda, David. "10 Common Mistakes That Startup and Small Companies Make | Fast Company." FastCompany. 8 Sept. 2009. <http://www.fastcompany.com/blog/david-lavenda/whatever-it-takes/10-common-mistakes-startupsmall-companies-make>.


Secondary Research Recommendations

• Though it is important for a startup to even have all the basics, like a logo, a website and business cards1, it is of the utmost importance for a startup to develop a marketing plan

• “Developing a Strategic Marketing Plan”, an article on StartupNation, discusses that marketing plans are not for large corporations alone

• Marketing plans help startups better understand their business, customers and strategy for success

• The article states that writing a marketing plan should become a yearly ritual for a startup2

1 "StartUp Package." Getting Your Business Going - Startups Marketing. 2010. <http://www.startupsmarketing.com/>.2 Marcella, Donna. "Develop a Strategic Marketing Plan." StartupNation. <http://www.startupnation.com/business-articles/1263/1/strategic-marketing-plan.asp>.Nicholas Clar, Jonathan Etheart, Carly Israel, Anjuli Lochan &

Isaac Sutton

Secondary Research Recommendations Cont’d.• Overview of Summary

• Describes business and major points of plan

• Situation Analysis• Detailed assessment of market, competitors, opportunities and

challenges

• Marketing Strategy • Specific revenue goals and strategy for undertaking situation

analysis

• Marketing Tactics• Action plan for executing strategy

• Marketing Budget and Timeline• Projected costs and timeline related to major marketing tactics

SOURCE: Marcella, Donna. "Develop a Strategic Marketing Plan." StartupNation. <http://www.startupnation.com/business-articles/1263/1/strategic-marketing-plan.asp>.


Interview 1: Transparent Health Network Takeaways• Transparent Health Network provides access to

affordable health care for uninsured employees.

• The company was founded on the belief that health insurance is too costly for many Americans.

• Transparent Health built it’s own network of Doctors, Pharmacies, and other Services.

• Services are currently offered in New York and Atlanta.


Source: Interview with Jonathan Etheart. Interview. February 18 2011.

Key Differentiators for Transparent Health

• Custom Built network of over 6000 providers in the New York Metro and Atlanta areas, in over 70 specialties

• Laboratories

• Pharmacy

• $6.99 for a 30-day supply and $12.99 for a 90-day supply of over 500 generics at participating Rite Aid pharmacies

• Deep discounts on other generic and brand name prescriptions at Rite Aid and over 50,000 participating pharmacies

• Get 20% off Rite Aid Brand products every day

• Price lookup system that allow our members to go to our site online and look up specific prices for procedures, so they have an idea of what to pay before they get there.

• Provider Lookup – So you can get all of the contact information from every doctor in our network, within a 5, 10, 25 mile radius of your house.

• Hospital Advocate line – to navigate through the red tape at the hospital.

• 24 Hour Nurse Hotline



Main Challenges for Transparent Health

• Transparent Health faces similar challenges to other start-up companies including:

• Initial finances• Customer Growth and Sustainability• Current economic times and customer frugality• Getting the end consumer to understand the value of the product.Nicholas Clar, Jonathan Etheart, Carly Israel, Anjuli Lochan &

Isaac Sutton


Strategies Implemented to Address Challenges

• Brand Equity via Newspaper articles, radio spots, print media, and insurance brokers.

• Developing a true understanding of what the customer, in this case the average uninsured American wants and needs.

• Attractive Pricing Strategies and appealing customer benefits.



Interview 2: Royal Footwear NYC

• Royal Footwear NYC provides affordable/stylish footwear to retailers nationwide

• The company was started 18 months ago by two entrepreneurs with an eye in fashionable ladies footwear

• Royal Footwear has built an amazing distribution channel with retail chain stores as well as cruise lines


Source: Cheik, Jack. Interview with Isaac Sutton. Interview. New York. 1 March 2011

Royal Footwear Challenges & Solutions

Solutions

1. Create relationships with banks in order to finance the company when cash is at a low

2. Creating a marketing technique in which retailers will adhere too or offer retailers better payment terms

3. Products are periodically checked before shipment to the US

4. Discuss terms with retailers offering incentive for early payment or find a bank that will factor the order



Challenges

1. Financing the business and finding the right terms to the agreement

2. Meeting sales quotas forlicensing companies

3. Up keeping high quality of product

4. Collecting payments from major retail chains

Royal Footwear SWOT Analysis

Weakness• Marketing inefficiency • Easy to knock off styles • High fixed cost

Threats• Non-payment from retailers • Chargeback's• Financing growth• Increase in production cost


Strengths• Customer Service• Affordable Pricing• Stylish Products• Licensed Products

Opportunities• To create new divisions• Expand internationally• Increase volume of sales


Interview 3: 10Ton


•10Ton is a video production and development company that ultimately provides a seamless story-world, with believable characters and compelling stories

•CONSUMERS: Agencies, Networks, Studios•DEVELOPMENT:• What is the pay-off of the project?• How does the concept match the mission and the medium, or many different

media?• Is there Brand Integration?• Is there a Web Element?• Talent Attachments?

• How is the target demographic going to use the content and on what platforms?

•PRODUCTION:• 10Ton provides Vision, Management, Personal Understanding and Technical

Acumen• Details, Deals, Technology, Talent

• Telling the Story, and Beat-By-Beat, taking the viewer on an emotional journey

We tell stories, with film, on the web and tv.

“If I was young, I would start a company that focused on the online video market – because it will be important.” –Eric Schmidt, Google CEO, 2001

Source: Chang, Chris. Interview with Nicholas Clar. Interview. New York. 3 March 2011

10Ton’s Challenges & Solutions

10Ton’s CHALLENGES:•Client Acquisition• Costs

• Amount of money flow directly dependant on number and types of clients

•Non-Traditional Business Model• Company intrinsically no value

• “Loan-Out”• Money made is “profit”

against project costs•Entertainment Business• Crazy and Fickle place• Unpredictability in the industry

•Competition• Largely focused on bigger OR smaller

projects

10Ton’s SOLUTIONS:•Client Acquisition• Open Market—No competition• Clients without knowledge, or little

interest in making online content• Began networking events: “Big

Screen Little Screen”•Non-Traditional Business Model• Persistence/Passion/Patience

• Obtaining clients with good lines of credit

• Trial and Error•Entertainment Business• Continual involvement in NY/LA film

communities•Competition• Open Market—No competition

• Unlimited growth potential




10Ton’s Key Differentiators

•10Ton was founded in 2007. • Began as consulting service

• Difficult to make money—not how productions get budgeted

• Fell back on being a production company• One of the shared characteristics each founder/partner had experience in

• Wide open market at the time• No established competition

• Poorly defined industry• More inventing a niche as opposed to carving one out

•Building Brand Equity• Industry a very social space

• Brining a real community to online video, brings both partners and visibility• Big Screen Little Screen

• First and now number one web-video content meet-up/mixer in NYC• Helped develop partnerships with Digitas, Tubefilter, Producers Guild of America

•Current State• Big clients

• Disney, Viacom, Paramount• Differentiation

• Developed expertise in the online space




Developing a Strategic Marketing Plan for a Startup

•Overview/Summary• What is your Mission Statement?

• Describe your business and bullet plans you wish to accomplish•Situation Analysis• The foundation of your marketing plan

• Market assessment• Competition• SWOT

•Marketing Strategy•Revenue goals

•Plan goals•Strategy to achieve set goals

•Includes Marketing Mix – The four P’s•Marketing Tactics

•Detailed account of how to accomplish goals•Advertising? PR? Viral marketing? Event attendance/participation?•Justify strategy• Benefits? Revenue Streams? Costs?

•Marketing Budget/Timeline• Provide detail accounts of finances• Check accounts to compare and contrast with set plans on monthly basis


Startup Marketing Recommendations:

The Basics


Marketing Plan

Situation Analysis Marketing Strategy

Current Performance Market Share

Market Demand Customer Needs

Competition & Industry

Competitive Position & Value

SWOT Analysis

3Best, Roger J. Market-Based Management: Strategies for Growing Customer Value and Profitability. 5 th ed. Upper Saddle River, Pearson Education, 2009

Situation Analysis measures the assessment of the current performance, marketing conditions, needs of customers, and competition and positioning.3

Recommendations Cont’d.

Current Performance•Review KPIs, annual sales, margins, and profits and compare to previous years.

•Go a step further, compare performance metrics such as customer service, which involves customer satisfaction, retention, profitability, and loyalty

•Above all, determine net promoter score

Market Demand

4 ibid 418.


Net Promoter Score = Promoters – Detractors 1

Is a significant element to the situation analysis as it serves as appraising the demands of all potential customers

Questions to ask: 4 What’s the current size of the market?

Where is it going?

What is the largest limit?

Determine segmentation through demographics and behaviors


Competition & Industry•Present summary of competition regarding profits as favorable or unfavorable

•Summary will influence the performance of profitsMarket Share


Calculate share performance

Market Share Index = (Promotion) x (Product) x (Price) x (Place) x (Service)5

• Measures how market share is achieved and how customers respond to marketing strategy ( a major marketing indicator)

• The marketing mix (5 P’s) all effect market share 5 Ibid. 91.


Customer Needs 6

Competitive Position & Value

6 Ibid. 215.


•Determine quality needs & positioning through• Differentiation of branding, service, product, and cost of purchase

• Brand management strategies to determine brand assets and equity

• Brand and product line strategies

•Overall benefits index

• Create value map of customer benefits & value

• may also include customer satisfaction, customer loyalty, and marketing channels

SWOT Analysis 7

STRENGTHS

OPPORTUNITIES

WEAKNESSES

THREATS

Sources that put company at an advantage

Situations that hinder

performance

Situations that increase profit

Factors that conflict with performance

7 Ibid. 426.


Startup Marketing Recommendations: Marketing Mix Strategy

• After Developing a Strategic Marketing Plan, Start-ups must develop tactics for implementing their strategic vision.

• The Marketing Mix covers the 4 P’s of Marketing• Product• Price• Place• Promotion


Product Positioning

• This strategy combines Product and Price.

• The main goal is to increase perceived customer value.• It’s important for any start-up venture to create clear & concise Value

Propositions .

• Market Segmentation- create customer groups in order to focus efforts more effectively.

• Pricing Strategies- Create price points that are both attractive and sensible for you and your customers.

• Research Competitor offerings in order to gain a better idea of where you stand and how to go about attacking them.


Channel Strategy

• This strategy deals directly with how and where goods & services will be sold.

• After successfully segmenting the market into channels, a start-up can begin to develop tactics to sell to and service their customers.

• Initial Stages: Use online mediums and direct contact to advertise and promote. Also, generate positive word of mouth via social media.

• Growth Stages: Develop formal sales and outreach approaches. These can include hiring sales people, increasing the advertising budget as revenue increases, and creating a true service culture where the customer feels valued.


Communication Strategy

• The communication strategy includes all of the methods that will be used to promote a company’s goods & services.

• Examples of Strategies:• Creating a functional website• Online Ads• Direct Mail• Free Trials• Social Media usage (Facebook, Twitter, Blogs, LinkedIN)• Solicit Press Coverage (after gaining positive feedback)• Salespeople & Account Managers (as you grow)• Use analytics to measure success of efforts.


Startup Marketing RecommendationMarketing Budget

Marketing per year should range from anywhere from 1 percent to 10 percent of sales depending on several factors

Marketing Budget Factors

• How established is the business

• What industry the company is in?

• How much can the company really afford

• Turn over rate of the companies products

• The profit margin of its products Source: Johnson, Hilary “How to build your marketing plan” Inc. September 27th 2010


Startup Marketing Recommendation Profit Plan

Every successful start-up company needs a well designed business plan which consist of many factors

Profit Plan

• Must follow the industry in which the company is currently addressing

• Consist of profit forecast for at least 3 years and monthly cash-flow projections

• Must have contingency plans to help with factors of competition and new technology

• Should contain the ideas of mixed lending, term lending and overdrafts


Bibliography

Best, Roger J. Market-Based Management: Strategies for Growing Customer Value and Profitability. 5th ed. Upper Saddle River, Pearson Education, 2009

Beverly, Robert. Interview with Jonathan Etheart. Interview. New York, NY. February 18 2011.

Chang, Chris. Interview with Nicholas Clar. Interview. New York, NY. 3 March 2011

Cheika, Jack. Interview with Isaac Sutton. Interview. New York. 1 March 2011

Johnson, Hilary “How to build your marketing plan” Inc. September 27th 2010

Lavenda, David. "10 Common Mistakes That Startup and Small Companies Make | Fast Company." FastCompany. 8 Sept. 2009. <http://www.fastcompany.com/blog/david-lavenda/whatever-it-takes/10-common-mistakes-startupsmall-companies-make>.

Marcella, Donna. "Develop a Strategic Marketing Plan." StartupNation. <http://www.startupnation.com/business-articles/1263/1/strategic-marketing-plan.asp>.

ZIMMERMAN, EILENE. "How Six Companies Failed to Survive 2010." New York Times. 5 Jan. 2011. Web. <http://www.nytimes.com/2011/01/06/business/smallbusiness/06sbiz.html?ref=smallbusiness>.

Special Issue in Marketing: Startup Marketing Group 3: Leave Behind Nicholas Clar, Jonathan Etheart,...

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