For the curious and ambitious, marketing at startups is incredibly exciting. Depending on the lifecycle of the company, you have responsibilities anywhere from building a marketing team and mapping out strategy, to running targeted campaigns catered to well-defined audiences.
It’s a high stakes game where the challenges are immense. Only 33% of startups ever make a profit and you desperately want to steer your startup into that exclusive group. But budgeting, ineffective processes, strategy, execution, and other aspects all amount to substantial obstacles on that journey.
In this article you will learn about four key challenges every startup must overcome on its growth journey.
#1 Being strategic
Many of the challenges startups face are self imposed. Budgeting, marketing effectiveness, targeting, marketing consistency and messaging are all independent challenges in themselves but they create problems due to a common root cause: not being strategic.
Being strategic entails:
- Researching and analyzing the market
- Developing a strategy based on research and analysis
- Execute strategy with tactics
Most startups, however, like to jump straight to the third point. They execute strategy without having a strategy. It’s tactics mania. You have probably seen this first hand as growth hacking, or gaining traction, which are really just Silicon Valley words for marketing tactics. As a consequence, too much emphasis is placed on the short term versus the long term. Short term is easier but too much will punish your bottom line in the long run.
You will have a much bigger chance of success being strategic. It’s a lot of work in the beginning and there will be some tough questions to answer but it is worth every penny and every minute.
Doing thorough research will allow you to have a better idea of who your target audiences are, where they hang out and what they like. Now you can develop value propositions that resonate with each segment. Suddenly, targeting just got a whole lot simpler. Using insights from your research you also have a better idea of which brand associations your advertisements should build and refresh. Subsequently, marketing effectiveness will increase.
With a clear idea of your audiences and with effective marketing targeting and messaging each group, it becomes easy to decide where to budget to reach your business goal — the one attached to your North Star Metric.
#2 Achieving product-market fit
This point could have easily been included under the being strategic point but due to just how important it is, I’ve decided to give it its own heading.
Achieving product-market fit is something all startups thrive for. Those who don’t, won’t ever truly take off and most run out of business. Product-market fit is difficult because it’s one of those fuzzy concepts that doesn’t have a universal definition. As a consequence it can prove quite tricky to measure accurately because how to do so is unique to each situation. What is universal is that finding product-market fit requires startups to be market oriented.
Too many founders get caught in the the beauty of their own product and obsess about features rather than the real problem the product solves. But the reality is that it’s all about the market. If you can’t match your product or service to a problem that needs solving then your days are quite frankly numbered.
Adopting market orientation involves realizing that you are not your customer and you don’t see the world in the same way. Even with best intentions, you carry too many biases that cloud your worldview and decision making — and so do your customers. Market research needs to become your source of truth, and you will find that this comes much easier with a strategic mindset in place.
#3 Building brand salience
- Designing ads that don’t build or refresh relevant brand associations
- Not researching what memory associations are devoted to your brand
- Not knowing what makes the brand distinctive and noticeable
- Advertising in bursts and then going silent in between
The above are all examples of mistakes marketers make provided by Byron Sharp in his book: How Brands Grow.1Sharp, B. (2014). How Brands Grow: What Marketers Don’t Know (Revised e-). Oxford University Press. But these are also examples of smaller challenges that make up a major challenge of building brand salience.
Brand salience the likelihood of your brand popping into a consumer’s mind at the point of purchase. It’s the amount and quality of memory nodes connected to your company that you have managed to build in people’s head.[ibid.] Let’s say you are creating a video editor app. In this instance, brand salience is the probability that a creative person about to edit a video, or even just thinking about editing a video, recalls your solution.
Startups with product-market fit will have it easier building brand salience as they have found their core users. But it will nonetheless be a challenge. Most startups are small and building brand salience is expensive. Very expensive. Though you may be able to bring the cost down with effective targeting. However, even with the budget in place building the desired associations is still hard as people generally hold the brand associations marketers intend them to form through marketing campaigns2Koll, O., & von Wallpach, S. (2014). Intended brand associations: Do they really drive consumer response? Journal of Business Research, 67(7), 1501–1507. https://doi.org/10.1016/j.jbusres.2013.06.010 which in themselves need to run consistently to be effective.
#4 Avoiding price promotions
Last but not least, startups need to avoid the temptation to constantly use price promotions in marketing campaigns. This is a bigger challenge that it may seem.
Price promotions have for example become a norm in tracking influencer campaigns. They may also be tempting leading up to important events such as fundraising rounds. On top of that they produce instant results that can become an addiction.
It’s not without reason that Les Binet called price promotions “the crack cocaine of marketing.” In the short term they are amazing. Weekly active users and products shipped go off the charts week after week as long as you just keep promoting. But in the long run they teach your customers to buy your product at a discount and increases price elasticity3Binet, L., & Field, P. (2013). The Long and the Short of it: Balancing Short and Long-Term Marketing. and effectively wipe out your pricing power.
- 1Sharp, B. (2014). How Brands Grow: What Marketers Don’t Know (Revised e-). Oxford University Press.
- 2Koll, O., & von Wallpach, S. (2014). Intended brand associations: Do they really drive consumer response? Journal of Business Research, 67(7), 1501–1507. https://doi.org/10.1016/j.jbusres.2013.06.010
- 3Binet, L., & Field, P. (2013). The Long and the Short of it: Balancing Short and Long-Term Marketing.