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Marketing
Communication & Distribution
Presented by
Steven R. Kopits
Feb. 2003
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Overview - Marketing
• Customer Demand
• Product Offering
• Channels
– Communication
– Distribution
– Payment
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Typical Entrepreneur Perspective
• Customer Demand
• Superior Product
• Channels
Entrpereneurs often put excessive focus on the product or service to the detriment of
focus on customers or channels. The very definition of a technology-driven company.
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Customer Demand
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Need
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The desire for a product or service
Demand
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The ability to pay for a product or service
Demand is the desire and ability to buy a product or service.
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Customer Types
Customer Types
"A"
"B"
"C"
"D"
Understands own problem
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x
Understands own envisioned solution
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?
x
x
Is prepared to act
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x
x
Has necessary funding
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?
x
x
Has necessary approvals
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x
x
x
Believes your sales pitch (credibility)
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x
x
Is prepared to accept your terms
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x
x
Months to sales conversion
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12
24
24+
“A” and “B” customers are preferable, but in most innovative industries,
perhaps 70% of prospects are “C” and “D” customers
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Characteristic Comments
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“A” Customers
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“B” Customers
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‘I like the product, but I need to do more research before I can decide.’
“C” Customers
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‘Yes, we have that problem, but I don’t know what to do about it. We get
by. How does your product relate to our situation?’
“D” Customers
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‘Bring me a proposal I can sign.’
‘We have no problems like that in our organization.’
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The Sales Funnel
30 D’s
15 C’s
5 B’s
1A
The Sales Funnel:
For every converted sales, there are about 30 leads to follow up
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Credibility & Prejudice
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Credibility
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“B” customers may well want the product or service, but may not be convinced that
you can deliver it
“C” customers will neither be ready to buy the product, nor ready to buy it from you.
“D” customers may be offended by your sales pitch, as they do not yet perceive they
have a problem.
Prejudice
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Lacking extensive education, a customer will favor his own preconception of a
problem and its solution, regardless whether this is actually correct
Education is the key to overcoming prejudice
Time with the decision-maker is the key to imparting information and education
Access is the key to time
If access is hard to obtain, trying sell into—and not away from—prejudices.
And remember: the three keys to selling are credibility, credibility, and credibility.
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Product Offering
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A superior offer
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50% cheaper or better than current solution
A superior offer will be the entrepreneur’s natural strength
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One benefit of being technology-driven
As long as the technology solves an important problem for an identified customer
demand
However, an offer does not exist in a vacuum:
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Product
Placement
Packaging
Promotion
The entrepreneur needs to move away from just the product and also consider the
‘channels’: packaging, placement, and promotion.
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Packaging
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Characteristics
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Identifiable
Comprehensible
Practical (convenient)
Time-saving
Consistent
Durable/Stable
Neat and clean
Appealing
Although packaging is general applied to consumer goods, every
category has an analogy in services as well.
Although packaging is usually not the substance of the product, it can facilitate the
purchasing decision, and poorly executed, it can prevent a purchase.
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Promotion
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Promotion
– The process of communicating your offer to potential customers
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Two misconceptions
– “Promotion is just used to get us to buy things we don’t want.”
– “Advertising doesn’t contain any information.”
•
Advertising communication has limitations
– Difficulties in targetting customers precisely enough (time, place, medium)
– Advertising is to act as a reminder—ie, ’create brand awareness’—in some
cases, not as a purveyor of new information
– In mature industries with commodities characteristics, advertising is used to
try to differentiate products that are essentially similar
•
Nevertheless, the primary function of promotion is to let the market know
about your superior offer.
For the tech entrepreneur, advertising and promotion are tools for communicating your
superior offer to the market. Customers need to know about your product to buy it.
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Communication
• Three goals of communication:
– Close “A” customers. Get them to buy your product.
– Convince “B” customers: Provide them with additional
information to make a decision, and reinforce your company
as the best choice (share of mind)
– Coach “C” and “D” customers and use public presence as a
means to gain credibility with them—and access to them.
Each type of communication has a specific goal with a specific customer set.
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Communicating with Specific Customers
• Answer the following:
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Who are your customers?
Where are they?
When are they available to deal with your pitch?
When do they decide?
How do they decide?
How can you reach them at the right place and time?
How much will it cost? (cost/benefit)
A general advertising—in essence, soft—problem can be converted into a
technical problem. And you are good at solving technical problems.
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Distribution
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Not only do you need to target your superior product to a specific
customer set, you need to communicate the opportunity. You also need
to get the product into the marketplace—distribution.
Distribution considerations:
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Access to channels
Channel access to your customers
Channel credibility with your customers
Cost & Dependence
Other channel considerations
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terms (volumes, exclusivity, duration, severability)
conflicts (does your product have priority?)
security, complexity and risk
sophistication
A general distribution—in essence, softish—problem can be converted into a
technical problem. And you are good at solving technical problems.
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Payment Channels
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Payment is the flip side of distribution—but not exactly the same thing.
Payment issues:
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Method (cash, card, invoice)
Timing/Terms (pre, post, at delivery, collection cycle)
Risk (non-payment, customer fraud, channel theft, embezzling)
Complexity, stability, and opportunity for mistakes
Location: physical and jurisdictional
Real time, online, offline, batch, remote
Tax implications
Refunds
Channel costs
Degree of integration with general ledger
Payment channels are every bit as important as distribution channels.
Can be source of competitive weakness—or strength.
You not only have to sell it, you have to get paid—consistently and safely.
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Summary
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•
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Know your customer.
Have a good product.
Communicate the offer.
Make sure the customer can buy the product
easily.
• Make sure you get paid.
Customer. Product. Communication. Distribution.
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Case Study
• New Air is a start-up regional airline looking to serve Central
Europe from Budapest. It’s typical round trip prices are €130,
about 40% of prices of the major airlines.
• Questions:
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Who are this company’s core clients?
How compelling is the offer?
How should the airline package its offer?
Who are its natural partners?
How should it promote itself?
How should it distribute its product?
What payment issues could it have?
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Contact Details
Steven Kopits
telephone: +1 508 685 1200
email: [email protected]
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