I’ve been thinking a lot about marketing and distribution. In this day and age, it’s pretty clear that distribution wins everything. This is also an area where I see a lot of snake oil. Everybody is trying to sell you something that promises great ROI.
You need a simple structured framework to think through distribution and marketing. It is a mistake to directly jump into tactics. Should I do search? Should I try podcasts? Should I hire a marketing agency to do everything?
This is putting the cart before the horse.
I am a big fan of the 4P’s of marketing. Thank you UT Mccombs for introducing me to this topic. The 4P’s at a high level are
- Product: What are you solving for the customer?
Price: What are you charging the customer for this product?
Place: Where can they get? How can they get it?
Promotion: How are you going to talk about the product and communicate the value proposition?
The last P – Promotion is what most folks refer to as marketing. You cannot jump to it first – you have to think through the other parts first.
Everything starts with the product. What are you solving for the customer? Why is your method better than the alternatives? If you do not have a clear articulation, in your own words, of what problem you are solving for the customer – do not pass go.
Price is pretty self-explanatory and it is ok to not get this right. Every company in the early stages gets this wrong. There are however some simple ways to think about pricing. You can price to the value you provide. You can price to get to your target unit economics. At an early stage. these are valid options but you are prematurely optimizing. By far the biggest determinant of price is your competition. Your customer already has a price in mind that is anchored to your competitor’s price. Patio11 also has great advice, start with an initial number and double it i.e always be raising prices.
Place and Promotion: I lump these together. By the time you get to this step you should have
- A clear understanding of what your product solves
A clear understanding of your competition and your and their price points
One of the P’s that is embedded in this step is Positioning. It is not explicitly talked about but is a core concept that has to be flushed out. Your customer is not making a decision in a vacuum. Humans think in relative terms. So, you have to talk about how your solution to the problem is better than the alternatives – i.e relative positioning. Even for a thing that doesn’t exist yet (a new category), you are always competing against something. For new categories, you are competing against the status quo (doing nothing) which is the HARDEST to overcome. The status quo is comfortable, we are ok with the problems in the status quo and do not want to move. You have to nail down your customer value proposition and product positioning. The question you are trying to answer is – how do I communicate to my customer on why they should care about my product?
Armed with your Product Value proposition, Product positioning against alternative and price – you are now ready to get into the nuts and bolts of demand generation and go to market (GTM). Once this fundamental framework is established only then do you step into the channel discussion.
This framework can be used as a good test to distinguish between a strategic marketer vs a channel marketer. A channel marketer only knows about the mechanics of the channel. They are like a frontline person on the factory assembly line. They will do a good job of managing a widget. A strategic marketer needs to design the entire system and decide what widgets to make (strategy). A strategic marketer needs to have a structured approach to the entire system.
In the next post, let’s tackle how to think about channels and how to evaluate success.