Skeet and Ike's in Vancouver
used a Golden retriever with dashed guide-dog ambitions to lead the organic
food manufacturer to the promised land. Lost Boys Studios Inc., also of
Vancouver, indulged in extravagant parties and wallpapered the town with
lavish print ads.
Marketing strategies for
start-up businesses are hit-and-miss affairs. Unfortunately for a large
percentage of those businesses, it is more miss than hit.
Up to 40% of Canadian
businesses fail in their first year. By year four, that rate has jumped
to as high as 70%, according to Statistics Canada. Key among the reasons
behind business failure is marketing.
James Schauer, a Brighton,
Ont.-based management and marketing consultant, says it is one of the most
misunderstood and misused aspects of business in North America.
The Easton Marketing Ltd.
principle says that is because "most people, especially in the United States,
see marketing as advertising and sales, and it ain't."
and sales is not all....
is one sub-set of Mass Selling, which is in turn a part of Promotion -
just one of the 4 P's
A research paper, Marketing
and Clearing the Path, by Mr. Schauer, points out lack of marketing skills,
managerial inexperience and incompetence kill 90% of businesses.
He says the 21st-century
marketplace's accelerated pace of change has made marketing critical
to the survival of any business, be it a startup or a well-established
of change influenced by
of developments in the "Technological Environment
intensity of the "Competitive
massive changes in the "Social
many updates in the "Political-Regulatory
While most entrepreneurs
rolling their new-found companies down the runway might get the dollars-and-cents
realities involved in achieving liftoff, marketing is a different story.
For starters, there
is a lot of over-inflated jargon, such as demographics; market
segmentation, the Porter 5 Forces, which are suppliers, substitutes, industry,
competitors and buyers; and socio-cultural environments. Add to that a
stable of acronyms ranging from SWOT (strengths, weakness, opportunities
and threats) to PEST (the external influences on a business: political,
economical, social, technological).
Small wonder most new businesses
do not understand marketing. Trudy Belanco, the senior business consultant
at Ontario's Brantford-Brant Business Resource Enterprise Centre, says
between 85% and 90% of business startups do not have a marketing plan.
"New businesses are aware
of marketing, but it's definitely not a strong suit. I find that most businesses
are the best-kept secret," she says.
That is usually a fatal oversight.
Judy Bishop of Bishop and
Company in Vancouver says: "Sales is the short-term capture of business;
marketing is the development of flow of business over time. If you don't
do both, you die."
A marketing plan is an essential
first step in planning that can help companies avoid going under.
David Frey, president of
Marketing Best Practices Inc., of Houston, Tex., says it should be the
first element of any business plan. "Your marketing plan is where you prove
your concept," he says.
This involves thinking through
such questions as: "Does my market want my product or service? Do I have
proof that my market will pay for my product or service? What competition
will I face and how will those companies respond? If you can't sell it,
you shouldn't produce it," he says.
A marketing plan is "a recipe
for getting it right," Ms. Bishop says. That recipe should include goals,
marketing tactics and specific actions to execute both. It should be aimed
at a specific customer and be grounded in sound research.
She says one of the most
common errors new companies make is "assuming the world will want what
they have -- in the package they have it in, at the price they have
it at, in the way they want to sell it."
of a "product orientation"
The key is to listen to
the customer, to what the marketplace is saying and to what the competition
is saying. "If you don't know what is important to your customer, how the
heck can you satisfy them fully?" Mr. Schauer asks.
to the customer is a "marketing orientation"
"Your business ultimately
depends, not on customer satisfaction but on having them return as loyal
The consultant also preaches
marketing as a holistic company-wide strategy, not the piecemeal approach
adopted by most firms.
Corp. has developed an acute ear for the marketplace that has paid huge
dividends. Founded in 1976, it is North America's largest developer of
destination resorts. Its revenue for 2001 was $1.4-billion, up almost 17%
from a year earlier.
James Askew, vice-president
of Intrawest's Playground sales arm, says 80% of the company's success
is from listening to the marketplace. Intelligence-gathering starts with
its sales staff, and regular input from focus groups guides the scope and
detail of Intrawest resort developments.
Of course, there are fiscal
realities. Most companies do not start with huge cash reserves. Therefore,
effective marketing requires squeezing the best bang from every buck.
Skeet and Ike's started in
1996 as a two-man home business peddling specialty peanut butters out the
back door of one of its partner's homes. Dogged marketing has changed all
that. From 1997 to 2001, the organic snack manufacturer's annual revenues
jumped from $47,000 to $1.5-million.
The company caught an early
break when its label immortalizing Ike, a Golden retriever, piqued the
interest of a distributor who liked dogs.
Ian Walker, president of
Skeet and Ike's, says the real growth catalyst was curbside sweat marketing:
Distributing samples at Vancouver's Granville Island market and cajoling
grocers into giving them space in flyers and stores, where they distributed
samples. The meet-and-greet approach extended from end-user through distributors,
store owners and all layers of its sales and supply chain.
For Lost Boys Studios, marketing
began in 1996 as an excuse for the animation company "to justify throwing
huge, crazy parties and peeing on our competition's rock through oversized
print ads," says Mark Benard, company founder.
Recognizing that ego and
personal insecurities were driving marketing, he shifted gears. One of
British Columbia's fastest- growing companies, Lost Boys sinks about 30%
of its resources into solidifying existing relationships and cultivating
As with any endeavour, patience
and perseverance are essential for a successful marketing plan.
"The problem with the market,"
says Alvin Wasserman, of Vancouver's Wasserman and Partners Advertising
Inc., "is that it's often way slower than you think, and if you haven't
worked it through and had resources [and] timing, a single burst is generally
not going to get you there. There are very few true overnight successes."
START OFF ON THE RIGHT FOOT:
In the past decade, small
businesses in Canada have been a key engine of economic growth.
More Canadians are self-employed (one in six) than 20 years ago (one in
eight), and six in 10 work for a small or mid-sized business.
"A large part of [the] success
of the Canadian economy relies on the success of our small business customers
and we want to do everything we can to help them," says Susan Kennedy-Loewen,
vice-president for small business banking at Scotiabank.
She offers these tips:
Have a drive to succeed Being
your own boss has advantages: You are free to use your own ideas, set your
own hours and focus on your goals. However, most small business owners
say they work much longer hours for themselves than they ever did for others.
Making your business work requires self-confidence, drive, dedication and
commitment. It is not easy, but it is doable.
UNDERSTAND YOUR BUSINESS
Know how your skills apply to your business area, what talent you bring
to it and what training. Know if there will be a market for your product
or service. The more research you do, the better. No business fails because
the owner knows too much.
INVESTIGATE YOUR MARKET This
is a multi-staged process. Begin online, talk to people in the field and
then explore the details. The government of Canada has Web sites to help
you in the initial stages of market research: www.cbsc.org, the Canadian
Business Service Centre, has advice on starting or expanding a business;
www.strategis.gc.ca, Industry Canada, has research on markets and other
businesses and downloadable guides; www.statscan.gc.ca, Statistics Canada,
has demographic research and trends, including community profiles.
Create a plan This is the
cornerstone of a successful venture. It need not be complicated at first,
but it should be well thought out and include skills and expertise, the
market, added value for customers, infrastructure, suppliers and financing.
MEET YOUR BANKER One of the
most important long-term relationships you will have (outside of customers)
will be with your banker. Financing a venture is a crucial step. A small
business banker at your bank branch can guide you through the pitfalls
of startup and beyond, help with a business plan and assist with financial
planning for the future.
Part one of
a six-part series.