The young founder-CEO of the 5 year old company was worrying about his company’s future. He had just learnt that 2 important contracts had been lost by his company. In addition, 3 other companies had also awarded contracts to others and what was worse, his company wasn’t even invited to make a proposal. His company operated in a large, fast growing but immensely fragmented industry. In his city alone, there were over 3000 companies competing for business.
The CEO had built his company over the past 5 years into a profitable, fast growing business with a set of well known customers. He realized that there was a terrific opportunity to create a full-service, nationally admired, branded company in his industry, given its characteristics.

His team consisted of people he knew from his years at IIT. His company had grown through sheer diligence, persistence and hard work. Starting the company after just one year of working after graduation, there was naturally a lot of “seat-of-the-pants” and “learning by doing” management. His organization had a clearly identifiable teams responsible for technology team, operations, and delivery.
There was no clear sales and marketing team. The CEO and a couple of his team members were doing all the sales which basically meant leveraging contacts to procure business. And marketing? “I don’t want to waste money advertising in newspapers as our business doesn’t need it” was his refrain.

Equating marketing with advertising is one of the most common errors made. And our CEO too was committing it! It is a legacy of our lack of familiarity with a market economy given that we’ve only been exposed to it since 1991, the year of India’s economic liberalization. In a market based economy, it is but natural that one must understand the market.
And what is a market but the sum total of the suppliers and customers and the dynamics of interchange (e.g. pricing) between them. Macro-economic & regulatory variables impact these dynamics. Coming down a notch from the understanding of the market in general to specifics leads to the following questions that need answering:

• Who is my customer – what are the characteristics of my ideal customer in terms of size, their area of operations, their needs, their expectations, their ability to pay, their openness to dealing with a company like ours, our ability to reach such customers, and so on. Every one who breathes isn’t my customer! It is therefore important to understand the various customer segments, the different needs of each segment, the size and growth opportunities per segment. -
• Why should my customer buy from me? In what way, am I different from all the other choices my customer has? How do I add value to my customer? How much of their budget is coming to us? How do we get more share of the customer’s wallet? Cost is but one determinant of customer relationship but the one that most of us focus on. What about other elements like high quality, speed & timeliness, predictability & reliability, risk reduction, servicing multiple needs of the customer and so on. -
• What do my current customers think of me? Who else do they give business to? How do I compare vis-à-vis these others? How well do I know my customers? Do they know me? Will they refer me to others? Usually, companies either have a terribly inflated or sometimes, a very deflated self-image. Unfortunately, the opinion of the one who really matters namely, the customer is not factored into the creation of this self-image!
• How do I compare with my competitors in my industry on multiple dimensions such as type, number and quality of customers, pricing, costs, range of services and products offered and financial performance.
• What do our employees, partners, experts, and industry players in general think of me? Will our employees refer their best friends to our company? How do I build relationships with external stakeholders to create a win-win equation.

An honest answering of these questions is a critical part of understanding marketing. Fixing the gaps that will inevitably arise out of such a critical analysis leads to the creation of a marketing plan to fix these gaps. Communicating the company’s value proposition to customers and other stakeholders is one of the outcomes of the marketing plan. And advertising is but one of the elements of this marketing communication!

So, the next time you dismiss marketing as wasteful advertising, think again.

What do you think?

[Guest post by Sanjay Anandaram. The post first appeared in FE. Reproduced

with author's permission]

Tags: Indian Startups