Entrepreneurial Marketing

In many ways, the principles of marketing for the entrepreneur are the same as they are for any business venture. However, because entrepreneurs typically have a limited marketing budget and because they are trying to sell a new service or product that does not have a track record with the target market, it is particularly important that an entrepreneur's marketing budget be well-spent to help maximize the number of new customers that it generates. For this reason, it is important that the entrepreneur develop a strong marketing plan based on research of the needs and characteristics of the target market and focus the marketing efforts on that specific target market. Marketing efforts do not have to be prohibitively expensive, however. There are a number of low-cost ways to market one's product or service — particularly over the Internet — that allow businesses to reach their target markets without a great outlay of cash.

Keywords E-Marketing; Market Share; Positioning; Strategic Planning; Target Market

Entrepreneurship > Entrepreneurial Marketing

Overview

No matter how innovative one's idea is, if potential clients or customers do not know about it, they will not buy the product or service. To survive, one must market. To be successful, one must market well.

If anything, marketing is more important for entrepreneurial firms than for larger organizations with established products or services. This is true for several reasons. First, by definition, entrepreneurial firms are trying to sell something new — an idea, product, or service that is as yet unknown to potential customers. Second, even if the entrepreneur or team with the idea is well-known in their current circle of business contacts, it takes effort to turn colleagues into customers. If the entrepreneur or team is not well-known, they will have to convince potential customers not only that they have an idea that the customer needs but also that they will be able to deliver it. In addition, unless the entrepreneur is in the unusual situation of working within an established organization, he or she will typically have little security if the new venture fails. Therefore, unfocused marketing efforts alone are not sufficient: successful marketing is crucial to the viability of the entrepreneurial organization.

Frequently, however, an entrepreneur's enthusiasm is for the technical aspects of the venture — designing the product or providing the service — rather than selling the idea. To make matters worse, marketing is not an isolated activity or even a set of isolated activities but an ongoing process that must continue throughout the life cycle of the organization if it wishes to survive and thrive. So for better or worse, the entrepreneur must recognize the importance of marketing and design a strategy that will maximize the acquisition of customers.

In reality, marketing is everything that the entrepreneur does to promote the business, from picking a name for the company and designing a logo, business card, and brochure to building a web site and buying media ads. Marketing also includes such activities as networking — building and maintaining a mutually beneficial relationship with other business people and potential clients or customers. Networking can help one fine tune ideas by both listening and talking to one's professional peers and potential customers. Networking can also give the entrepreneur new ideas about what the target market would like to see in terms of new products or services. Trade shows and professional conferences are excellent places for networking, where one can make new contacts and exchange business cards. Good networking efforts, however, are not just about selling one's idea; good networking efforts involve listening as well as talking, to better understand the target market and how to reach it.

Although most general marketing principles apply equally to the entrepreneurial business and the business world at large, because of their small size, entrepreneurial firms need to be particularly careful about how they spend their limited marketing dollars. Certainly, traditional marketing efforts such as print ads (e.g., advertisements in newspapers, magazines, or trade publications), radio or television ads, or mass mailings of flyers or brochures can be appropriate depending on the product or service being sold and the potential market. However, most entrepreneurs have little budget for marketing, and they need to be able to get the most bang for their marketing buck. There are a number of low cost and even free ways to do this. For example, electronic newsletters are an excellent way to keep one's company name and products in front of potential customers. One can also gain free publicity through giving away goods or services to local charities. Getting involved in professional organizations, the local chamber of commerce, or other organizations that include members of the target market is a good way to network and gain customers. The entrepreneur can also speak at public events on topics related the company's product or service or write and publish articles (either in journals or on the web) related to the business. Trade shows and professional conventions are another place where the entrepreneur can spread the word about his or her product. A well-designed business card or brochure and the ability to listen to what potential customers want can go a long way in gaining customers. Combined with strategic traditional or electronic marketing ads, the entrepreneur can target the appropriate audience and become well-positioned within the marketplace.

Although it is important for the entrepreneur to try different ways to market in order to see what works best for the particular product and target audience, it is also important that marketing efforts be focused. It has frequently been observed that one of the biggest marketing mistakes that a small or entrepreneurial business can make is to try to be all things to all people. Many entrepreneurs make the mistake of spreading themselves too thin rather than doing the research to find out what potential customers want or need. For example, to say that one's new widget not only is a better mousetrap but also will scrub floors and feed the cat is not believable. As a result, potential customers will tend to not take the product seriously. Although this is obviously an exaggerated example, many entrepreneurs try to spread themselves too thin with initial marketing efforts, offering consulting services, for example, for anything from performance enhancement to research and development. Although the entrepreneur may have the skills for all these services, without the proven track record of success, potential clients will be hesitant to hire him or her.

Rather than taking a shotgun approach in which one tries to get a little business from a wide variety of markets, it is better to position the company to reach a small market and then to get as many customers from that small market as possible. This allows the company to build the much-needed reputation and proven track record for excellence that will allow it to not only be successful in the short-term but also position itself for expansion and growth in the future. By positioning the company with a smaller, more focused target market, the entrepreneurial organization can distinguish itself from its competitors by stressing unique selling points that appeal to the specific target market. For example, owners of rodent-infested homes are going to be interested in a widget that is a better mousetrap but not care that it can also feed the cat (since if they had cats they would not need a mousetrap). Similarly, a new boutique could not easily reach a target audience of both high school students and business professionals; the two markets want different types of clothes and will not want to be seen in a shop that is attractive to the other group. Rather, the boutique's marketing efforts would be more effective by focusing on only one of the product lines and making the retail environment as attractive to that market share as possible.

Before starting a marketing effort, the entrepreneur needs to understand the potential market. It is always tempting to just spend one's budget on the most advertising that one can buy, but research has shown that this is not the way to success. Rather, it is important to find out more about the target market so that marketing efforts can be focused to gain as many customers as possible. To accomplish this goal, it is important to do several things. First, before starting a marketing campaign, a market survey should be done. Although this is an often neglected step in many marketing efforts, a market survey enables the entrepreneur to learn more about the needs and wants of the target market as well as the best ways to reach them. Some of this information can be gained through public-access governmental demographic data, and some of it can be collected through surveys conducted in person, over the telephone, or over the Internet.

Once the survey data is analyzed and the nature of the target audience is understood, the entrepreneur can develop a marketing strategy for how best to reach these potential customers. In addition, the marketing strategy should include which media should be used to reach the target audience: the business executives might be reasonably reached through an ad in the Wall Street Journal, but the high school students probably would not see an ad there. Once the target market is understood and a marketing strategy developed, this information can be put together with budgets and other details in the development of a marketing plan that will help the entrepreneur learn from experience and position the company for success and future growth.

Applications

As observed earlier, in many ways, marketing strategies for the entrepreneur are little different from those for any business or organization. However, the limited marketing budget of most entrepreneurs makes it imperative that the monies be invested wisely in order to bring the greatest return on investment. One marketing step that is often skipped by entrepreneurs in a misguided attempt to be frugal is the proper positioning of oneself and one's service or product in the marketplace. In addition, the ability to e-market can help entrepreneurs gain data and market products and services much more efficiently than is possible with many traditional media.

Positioning Oneself

As with all things in business, it is important that one perform strategic planning before announcing to the world the availability of a new product or service. Knowing that there is a need and that one has a product or service that will fill it is insufficient. Marketing efforts — particularly for entrepreneurs — must be carefully crafted so that the right message is sent and targeted towards a narrow market so that the message has maximum impact.

One important tool for positioning oneself in the marketplace is the marketing plan. This is a strategic planning document that helps the entrepreneur identify the key marketing issues that are critical to long-term success, set goals and objectives for the organization, and develop meaningful measures of success for identifying and attracting potential customers. Marketing plans help the entrepreneur know how best to focus the efforts of the organization to maximize their impact and effectiveness. With a marketing plan in place, one can look back and review how well previous marketing efforts have performed and revise strategies as necessary. Marketing plans also help the entrepreneur to look ahead, and consider the changing nature of the marketplace and trends in the market so that products, services, and marketing efforts can continue to stay abreast of what the market needs or wants. Marketing plans also help the organization's management to focus on the big picture for the organization rather than getting lost in the technical work and day-to-day management of the firm.

There is no one approach to writing a marketing plan, and even the general approaches must be tailored to the individual needs of the company. How one writes a marketing plan depends in part on whether the business is in the start-up phase, is in an aggressive growth phase, or is a mature company. These first two approaches are of particular interest to the entrepreneur as she or he tries to position the company within the marketplace.

Although it is tempting to do a marketing blitz to get out the word about the new product or service, marketing efforts for the start-up company or the business that is still finding its feet should focus on positioning the company within the market and on understanding the dynamics of the marketplace. Laying such strategic groundwork will help the company not only enter into the marketplace but also position itself for growth and continued future success. During the start-up phase of the business, it is typically best to focus on strategic issues and on testing possible marketing approaches. During this phase, entrepreneurs are well-advised to perform pilot studies to test the effectiveness of various marketing strategies (e.g., media ads, website) to see which works best. Marketing at this point is in many ways carried out by trial and error: entrepreneurs should not spend a great effort on trying to put a mature marketing plan into place when they are just starting their new venture. Rather, marketing at this point in the organization's life cycle will most likely be a series of trial runs to determine where the strengths and weaknesses of the plan are, what approaches to marketing work best, and how best to reach the target market.

Once the entrepreneurial organization develops a marketing plan that is bringing in business, it can spend more time looking at tactics and strategic implementations. As opposed to marketing plans for start-up organizations, the marketing plan for an organization in a growth phase will be more concerned with financial aspects. Marketing plans at this level should include such things as detailed budgets and projected revenues from the various sales thrusts that are mapped on a periodic basis (e.g., monthly or quarterly). These will help the entrepreneur or team keep better track of which strategies are most effective. In addition, marketing plans during the growth phase of an organization are best written to target a particular product line or type of service. For example, if Acme Corporation is trying to sell two products — the widget and the gizmo — there should be a separate marketing plan for each since each product will need to be described differently and even targeted toward a different market. With two separate marketing plans in place, it is easier to tell how each product is doing and whether the approach for either the widget or the gizmo needs to be differently conceptualized. At this phase in the company's life cycle, an initial market share should be established and the strengths and weaknesses of various marketing approaches will have been assessed. Marketing plans during growth phases are typically best when they focus not only on strategy but on implementation, examining the success and failures of marketing from the start-up phase, positioning the organization to gain the market share desired in the future, and implementing plans and strategies in the present that help the organization continue to move toward that goal.

E-Marketing

The rise of the Internet and the ease of designing and maintaining a professional website have allowed the potential to reach far greater numbers of prospective customers than was previously possible. This does not mean, however, that electronic marketing (e-marketing) should be the only strategy used to get the word out about one's product or service. There are still people who do not use the Internet and people who still want to have hard copy of professional, full-color advertising brochures that they can hold in their hands and ponder at their leisure. Further, e-marketing is not without its weaknesses and pitfalls. However, most businesses today need to consider having some presence on the Internet in order to attract and maintain customers.

The Internet can provide a wealth of information that the entrepreneur can use in marketing efforts. Whether one is offering goods or services, the Internet offers an array of opportunities for gathering information, testing marketing approaches, and advertising. For entrepreneurs offering products for sale, the Internet also offers effective ways to put one's catalog online and even to take orders and receive payment without the expense of a physical storefront or extensive staff.

Among the things that the Internet allows the entrepreneur to do is to research the competition. By searching the web, one can find out what competitors are selling, how and to whom they are advertising, and what the latest buzz words are for attracting potential customers. The Internet is also a source of information about potential customers. One can frequently find government demographic data online or lists of businesses or organizations that might be part of the target market. Internet research will allow one to get ideas for what makes a web site attractive or easily navigable so that one can build one's own site.

However, one needs to do more than set up a web site and hope that prospective customers or clients will see it when they do a search. It often takes several months for search engines to index and rank a new site highly enough for it to be seen by a significant number of prospective customers. Therefore, if a web site is used as a passive marketing tool, it will probably generate little interest. There are, however, things that the entrepreneur can do to encourage potential customers or clients to view the company's web site. Writing articles on the entrepreneur's or company's area of expertise is one way to attract new clients. An article on the "Ten Mistakes Most Managers Make" might not only attract readers but also give them a sample of a management consultant's advice. Magazines, e-zines (electronic magazines on the Internet), professional publications, and industry publications are all excellent ways to get one's message to the market. In addition to articles, one can also advertise the new product or service in most of these publications. Another option is to use pay-per-click advertising to reach a highly targeted population with advertising. In pay-per-click (PPC) advertising, the person or company advertising pays a fee for each visitor that clicks on their ad. PPC can include keyword advertising on search engines or other websites. Banner ads (graphical web advertising), flash ads (animated or interactive advertisements), or text ads all can be PPC. Another way to increase traffic to one's web site is to use web site traffic builder software that generates metatags (HTML tags that contain descriptive information about the webpage but do not appear in a browser) for the website pages and submits them to numerous search engines and directories. Combined with networking and other traditional marketing approaches, e-marketing can help the entrepreneur reach and win a greater market share.

Terms & Concepts

Demographic Data: Statistical information about a given subset of the human Population, such as persons living in a particular area, shopping at an area mall, or subscribing to a local newspaper. Demographic data might include such information as age, gender, or income distribution, or growth trends.

E-Marketing: E-marketing (electronic marketing) is a new and evolving discipline in which the Internet is used as the medium for an organization's marketing efforts to sell goods and services as well as to collect information about the needs and desires of potential customers. E-marketing can include pay-per-click advertising, banner ads, mass e-mailings, web sites, and blogging.

Growth Phase: The phase in an organization's life cycle after it has successfully entered the marketplace and is in the process of increasing its market share or the scope of its business enterprises.

Market Share: The proportion of total sales of a specific product or service that are earned by a particular business or organization.

Marketing Plan: A plan that specifies the actions the organization intends to take to obtain customers for its proffered goods or services. The marketing plan includes the organization's marketing strategy, which details elements like pricing, budget, specification of target markets, and intelligence about competitors.

Networking: Building and maintaining a mutually beneficial relationship with other business people and potential clients or customers.

Pilot Studies: Small scale, preliminary research studies that are performed in order to test the feasibility of an approach and provide feedback to modify the method if necessary before investment in a larger study or effort.

Positioning: The process of choosing a market niche for a product or service. Positioning includes analysis of the potential market and competitors, pricing of the product or service, advertising or other promotion effects, packaging, and distribution.

Start-Up Phase: The phase in an organization's life cycle when it is first enters begins operations and enters the market place.

Strategic Planning: The processes of determining the long-term goals of an organization and developing a plan to use the company's resources — including materials and personnel — to reach these goals.

Target Market: The people or businesses to whom the entrepreneur wishes to sell goods or services.

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Suggested Reading

Clift, V. (1994). True marketing pros master listening skills. Marketing News, 28, 9. Retrieved March 26, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9410282628&site=bsi-live

Clift, V. (1995). Who's influencing your customer's decisions? Marketing News, 29, 33. Retrieved March 26, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=9503074094&site=bsi-live

Lincoln, D. J. & Warberg, W. B. (1987, Apr). The role of microcomputers in small business marketing. Journal of Small Business Management, 25, 18–17. Retrieved March 26, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5274190&site=bsi-live

Lingelbach, D., Patino, A., & Pitta, D. A. (2012). The emergence of marketing in Millennial new ventures. Journal of Consumer Marketing, 29, 136–145. Retrieved November 18, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=73374561

McDaniel, S. W. & Parasuraman, A. (1986, Jan). Practical guidelines for small business marketing research. Journal of Small Business Management, 24, 1–8. Retrieved March 26, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=5266397&site=bsi-live

Newbert, S. (2012). Marketing amid the uncertainty of the social sector: Do social entrepreneurs follow best marketing practices? Journal of Public Policy & Marketing, 31, 75–90. Retrieved November 18, 2013, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=74749691