181
Chapter 9
Marketing and Sales
9.1 Introduction
Marketing is the process for creating, communicating, delivering, and
exchanging company offerings to customers and stakeholders. Marketing is
a critical business function for attracting customers.
1
Selling is offering to
exchange an item of value for a different item. The original item of value
being offered may be either tangible or intangible. The seller most often
sees the second item, usually money, as being of equal or greater value
than others being offered for sale.
2
A sale is the act of exchanging a prod-
uct or service in return for money or other form of compensation.
The marketing and sales functions differ greatly, but have the same end-
goals as shown in Table9.1. Selling is the nal stage in marketing. Both
marketing and sales share the goal of increasing the desirability and value to
the customer. Achieving this goal may involve the sales team using promo-
tional techniques such as advertising, sales promotion, publicity, and public
relations, creating new sales channels, or creating new/innovative products,
among other things. It includes bringing the potential customer to (1) visit
the organization’s website for more information, (2) directly contact the orga-
nization for more information, or (3) interact with the organization via social
media such as Twitter, Facebook, and blogs.
3
A manufacturer may use a marketing pull strategy by focusing its pro-
motional efforts on opinion leaders, celebrities, or end customers to create a
demand or “pull.” Pharmaceutical companies are now publically informing
consumers about the availability of new prescription drugs. The public is
182 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
then urged to “see your doctor for a prescription.” This is a classical market-
ing strategy to stimulate demand and create product sales.
Conversely, a manufacturer may use aggressive selling and trade advertis-
ing to convince a retailer, wholesaler, or distributor to carry and promote its
product. This approach is known as a push strategy. The retailer, in turn,
uses advertising, point-of-sale displays, shelf space, etc. to convince the cus-
tomer to purchase the “pushed” product.
4
These two classical marketing strategies are shown in Figure9.1.
Classical Marketing Strategies
Pu
sh Strategy
•
Uses the sales force and trade
promotions
.
• P
ersuade wholesalers and
retailers to carr
y brands.
• Sp
ecialty advertising.
• Co
operative advertising
• Relies on testimonials
Pull Strategy
• Spends on advertising and sales
promotion to increase demand.
• Entices customers to try your new
product.
• Lures customers away from
competitive products
• Lower price; better quality
Figure 9.1 Classical marketing strategies—The two basic marketing strategies of push
and pull and their differences.
Table9.1 Differences between Marketing and Sales
Marketing Sales
Produces what the customer wants Tries to get the customer to want what
the company produces
Focuses on needs, wants, and demands of
buyer
Revolves around needs, interests, and
timing of the seller
Outward looking Inward looking
Creates a pull Creates a push
Involves a set of interrelated activities End result of the marketing process
Creates satisfaction through relationships Personal attention and follow-up
Starts before a product/service exists After product is manufactured or
service created
Marketing and Sales ◾ 183
However, in the nal analysis, both marketing and sales strive to attract
and retain a critical mass of customers, in order to nancially sustain the
enterprise. The critical mass is a sufcient number of adopters of an
innovation in a social system so that the rate of adoption becomes self-
sustaining and creates further growth. It is an aspect of the theory of dif-
fusion of innovations, proposed by Everett Rogers in his inuential book
Diffusion of Innovations.
5
9.2 Selling Your Innovation
“If we listened to the experts, we would be riding faster horses.”
—Henry Ford
A startup generally depends on product innovation. An innovation, by de-
nition, is a brand new product/service being offered for the rst time. How
do entrepreneurs promote their innovation, since most potential customers
are unaware of the existence of the product/service?
One of the main functions of marketing is to create an insatiable need. In
2005, how many of us needed a smart phone, or an iPad? Marketing cre-
ated the need for these products. Prior to the introduction of any of their
innovative products, Apple’s Steve Jobs directed his marketing department to
perform market intelligence, followed by market research. At Apple, the mar-
keting department was charged with the responsibility of coordinating data
collection, interpretation of results, and developing a basis for marketing/
sales action.
You can promote your innovative products by:
◾ Identifying market needs (market pain)
◾ Communicating the features/advantages to prospective buyers
◾ Making goods/services readily available at convenient times/places
◾ Pricing goods/services that reect costs, competition, and ability/willing-
ness to purchase
◾ Providing post-sale service and follow-up to ensure satisfaction
Where in the marketplace does your new product offering t? Figure9.2
presents a bird’s-eye view of the main categories, according to newness to
the company and the market.
184 ◾ The Guide to Entrepreneurship: How to Create Wealth for Your Company
9.2.1 Needs, Wants, and Demands
“Companies can’t give job security. Only customers can.”
—Jack Welch, CEO, General Electric
Marketing theory divides human necessities into three basic parts. Needs
comprise some of the most basic and fundamental necessities of life such as
food, shelter, protection, good health, etc. These needs are not created by
marketing because they already exist in society.
Wants are desires for things that satisfy deeper requests, such as gour-
met foods, sports cars, vacations to exotic locales, etc. Advanced societies
are continually reshaping wants by societal forces such as schools, families,
business corporations, healthcare alternatives, etc. Entrepreneurial compa-
nies are very active in satisfying consumer wants with innovative solutions
and approaches. Needs are few; wants are many. Remember the old adage—
“People don’t know what they want, only what they know.”
Demands are wants for specic high-quality, high-priced products/
services that deliver superior performance. Entrepreneurial rms shine in
this marketing sphere. Most of the innovations carry a hefty price tag, thus
satisfying the demands of afuent customers who are willing and able to
Newness to the Market
Newness to the Company
First in the
world
New product
lines
New Products Category
Cost
reductions
Line
extensions
Innovations
Product
improvements
Figure 9.2 New products category—Where does your product t?
Marketing and Sales ◾ 185
buy these offerings. If we use the 80/20 rule, 20% of customers purchase
80% of the demand offerings.
Startups can market and promote their products by utilizing the methods
shown in Figure9.3.
9.3 Analyzing Your Market
“The future isn’t what it used to be.” —Yogi Berra
Your market is the set of actual and potential buyers of your products/
services. Markets can be divided into four categories: (1) potential, (2) avail-
able, (3) qualied, and (4) target. Your potential market is the aggregate
of all individuals, rms, and organizations in a particular market that have
some level of interest in a particular product/service.
6
Your available market
is where customers are willing and able to purchase the offering. A quali-
ed market occurs when prospects have indicated interest by performing
some act; that is, downloading specications, attending a seminar, visiting
your booth at a trade show, or calling your company in search of informa-
tion. Last, your target market refers to that select group of prospects that
deserve concentrated attention.
Marketing Program
Marketing tools
for
entrepreneurs
Promotion
(communication)
Positioning
(dierentiation)
Place
(delivery, availability)
Performance
(customization)
Product
(wants, demands)
Price
(cost, value)
Figure 9.3 Marketing program—The six promotional methods available to startups.
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