Entrepreneurial Marketing

Ted Finch
Chief Marketing Officer Titan Solutions Group

Overview
Objectives Background Marketing defined The marketing organization A Plan of action
Strategy Tactics 4 ps Operation

Objectives
To explain how to setup marketing at a high-tech startup, which positions and tripwires for when. Startups can be external (started from scratch), or internal (started from existing company with handpicked team).
External startups usually require self-funding, friends & family, angel investors, VC, or public funding. Internal startups are usually new divisions or new companies funded internallyand are often spun off (like my current company). All startups use a similar marketing process
By the way, these slides will be a little text heavy so you can refer back to them later

Background
21 years of marketing. 7 years consumer marketing in entertainment industry. 14 years high-tech marketing. Sold the companywas acquired five times. First high-tech external from scratch startup in 89, VP of sales and marketing, original 13 people grew to over 4,000 people. Sold company.
Executed over 400 product launches from over 150 companies (Sony, Microsoft, Ashton Tate, Compaq, Adobe, Lotus, IBM, Citrix, Aldus, Corel, Autodesk, HP, Intel, Canon, plus many more). Industry mercenaries launched entire categories. Sold company.

Later formed an internal startuppublishing software. Helped launch a category called the Internet. Four world-wide top sellers, including Netscape Navigator and AOL. Sold company. Formed another internal startup (1/2 owed by us, and owned by Tom Clancy)--Red Storm Entertainment. Sold company. Senior VP at Metrowerks, sold to Motorola. Sat on 7 person marketing board, headed up $2 billion division. Headed marketing at internal startup division. VP of Marketing at $130 billion GE, highest % growth sector. Responsible for rebooting acquired company marketing. Chief Marketing Officer at Titan Solutions Group. Currently creating a software startup divisionintend to take public. Founder of Chanimal The Ultimate Resource for Software Marketing at www.chanimal.com. 8 years old and over 53 meg and 250+ pages of content.

Marketing Defined
Often marketing is referred to as advertising, pr, collateral the promotional arm of the company Marketing is providing satisfaction. To provide that satisfaction, marketers study their target customers to find out what they want, design products or services to satisfy those wants, appropriately price, promote, distribute, and support that offering, and monitor customer satisfaction to fine tune their product (and then start all over again with the next release). Basically, marketing is finding a need and filling it.

Marketing Defined
Marketing includes strategy (determining what to do) and tactics (determining how to do it) The four Ps of the marketing mix is an easy framework to remember
Product (definition, validation, profitability) Price (margins, positioning) Placement (sales, distribution)
Sales is a subset of marketing

Promotion (PR, ads, events, online, etc.)

Organization
Always start with the marketing period (even before engineering so you know what engineering must do and can hire accordingly)
Initially you must have product marketing/management to define, validate, position, price and profitably drive product through development, promotions and sales into the market Too often the product is created first, by engineering (usually an engineering founder with an idea), before the first marketing person is hired. Marketing then applies reality therapy, promotes what theyve got, and soon starts the real process over to properly refine it hence the usual better 2nd release Engineering driven companies use field of dreams marketing. If you build it Market driven companies ask, What do you want (and are willing to pay for), and then they build it

The following org charts show a standard marketing organization, the stages of startup/marketing dept. development and tripwires

Marketing Organization
VP Marketing

Product Definition, Price

Channel Marketing Mgr Markeing Alliance Mgr

Director, MarCom

Director, Product Mgmt

Admin

Admin

Promotion

Marketing Operations
Event Marketing Product Marketing Mgr

Build, buy, align

International Marketing
Product Marketing Mgr

Trade Show House

Marketing Research

Product Training Mgr

Public Relations
PR Agency On-line Omsbudsman

Research Assistant
Research Firm

Ads / Direct Response Webmaster Mgr, Creative Services

Chart represents functions that exist within a marketing organization. In startups, multiple functions are handled by one person. As the organization grows, and the workload increases, each area is handled by a specialist. Areas plump from this point on depending on the # of products, channels, international, inhouse work, etc.

Production / Traffic Graphics Designer

Outside Design Copywriter

Early Organization
Titan Solutions Group

Hiring order

Titan Solutions

Titan Pro Services

Titan Software

Engineering Titan Solutions & Pro

Marketing

Sales (Direct Sales) 3

Support QA Docs

Product Manager (Product) 1 Product Marketing Research, Bus Intel

MarCom (Promotions) 2 PR On-line - Web Direct Response Advertising Events Graphic Design Copywriting Agency Mgmt

Marketing Alliances (Product/Promo) 4

Channel Marketing (Channel Mgmt)

1. 2. 3. 4. 5.

Get the product defined, validated and into development Wordsmith positioning, collateral (packaging, on-line, copywriting) Start pre-sales Formal alliances to ensure complete product Setup channel kit, define program, early recruiting

Next Stage Organization

Titan Solutions Group Titan Solutions Titan Pro Services Titan Software

Engineering Titan Solutions & Pro Support QA Docs

Marketing

Sales (Direct Sales) 3

Product Manager (Product) 1 Product Marketing Research, Bus Intel

MarCom (Promotions) 2

Marketing Alliances (Product/Promo) 4 Channel Marketing (Channel Mgmt) - 8

Sales Person - 5

PR - 6 On-line/Web - 7

Direct Response Advertising Events Graphic Design Copywriting Agency Mgmt

5. Additional sales to pre-sell product and start long sell-in 6. Start analyst meetings, prepare for press release, product launch 7. Setup on-line presense, product information, line up promotions, setup portals (press, reseller, customer) 8. Start recruiting in mass Definition, setup and initial promotions come first. The rest of the positions are filled as the product is launched.

This is a self-funding model. External funding may accelerate the process (but actually shouldnt unless entering a hyper competitive market)

Sage Tip: Organizational Chasm

Having personally gone through this stage six times (and having consulted multiple companies), I have found that the marketing generalist (wearing multiple hats) stage typically changes when the company transitions between 12-20 million and between 75 to 110 people. At this time, the workload is usually too great for the initial marketing individuals. The team must diversify and specialist must be hired (or be ready to step up internally). This is also the time that the original entrepreneurial do it all skills may bottleneck the company growth if they dont evolve, or let go (of 2-3 roles) for the group to specialize. I have seen some companies move all the way to 50 million and then stick there like glue, until they get through this transition so they can move to the next level.

Observations
Marketing has a mixed reputationoften deserved. Management seems to know the least about the roles of marketing and typically fill the department with engineers, customer support, sales, accounting, interns, you name it. To top it off, they throw in a graphic artist, since this position has to be specialized. Also, most VPs of Marketing that I work with, dont know much about marketing (having no formal marketing education (school or books), having come up through the ranks with similar non-marketing backgrounds). At Motorola Semi-Conductor Sector, with about 400 marketing people, only a handful had any marketing training. At multiple GE divisions (industrial systems not consumer goods), most of marketing was from support and engineeringwith only 1 business degree within the entire group. Other marketing VPs were technical lightweights, and usually only knew marketing communications--no formal pricing, product marketing, alliances or channel marketing background. Best background, technical undergraduate (or aptitude), graduate degree with marketing emphasis. Plus, sales and consumer marketing experienceto apply to technical products. Real marketing professionals, that are skilled (and practiced) at all 4 of the marketing Ps are rare. However, they can chew up a market and eat competitors for lunch and can easily recognize big holes to capitalize to help their startup succeed. They can also train and mentor existing folks with templates, processes and example. Ive spent much of my time mentoring teamsmany became world class (such as the team that launched Netscape Navigator, the oldest had been out of college for 18 months).

Overview Plan of Action

Setup (equipment, hook up, create plan of action, internal assessment) Strategy
Situational analysis market strategy
Market environment (competition, economy, regulations, etc.), Market segments, Product offering

Organizational strategy (adoption cycle, growth strategy) Market size, share (forecast), growth potential, product positioning

Tactics
Product (product & company, build, buy, align, positioning, , naming, branding approach) Pricing (objectives, strategy, structure, levels) Placement (direct, indirect, OEM, channel) Promotions (PR, on-line, ads, events) Collateral

Operations
Goals, budget, organization, support summarized in Marketing Plan

Start with a Plan of Action

In a start-up (internal or external), I always start with a plan of action. Personally, and require it of each team member. This is a high-level action plan that sets the framework for how you are going to proceed. It helps level set the team and establishes the stages and high-level target deadlines. The 2nd step estimates the time frames, could go into a Gantt chart, and proceeds to the business and marketing plan (with a lot of definition/validation work up front). I will take you through my actual plan of action for actual live work (nothing confidential, but this is the real process you are seeing how it is done, line by line) Note: it contains information to level set the executive team on terms and processes

Setup & Plan of Action

Done. Setup laptop, network, password, access, filing system Done. Initial assessment. Competition, market size, alliances, budgets, organization, collateral Done. (need to review & sign-off). Plan of action. Identify and sequence most of the marketing, sales, training, support, and product action items to create a commercial software division. Done. (setup meeting). Hook up with John to parse out Business Plan deliverables. Prepare w/Plan.

Strategy
Identify the uncontrollables (competition, economy, regulations, market demand, market size, existing segmentation), and decide how to address them with the items we can control (product positioning, marketing mix (4 Ps (product, price, placement, promotion) to achieve our overall financial objectives (including sustainable financial growth).

Formal Plans
Business Plan
Marketing plan is a subset of overall business plan covering the market section. I will work internally to further delegate so we can meet our timeframe. Marketing plan will dove tail with financials and projections.

Situational Analysis
Market environment
Define our current and future space (hi-level, where do we want to play now, where should we play later) Competition
Identify current and potential competitors - ranked Review product (install, timing, usability, featureseverything a prospect would see), price, distribution and sales, promotions, alliances, OEMs, supply chain. Identify holes. SWAT analysis

Technological issues
Preferred platforms (.net versus Notes), latest technical options, trends

Economic issues
State of the economy, current impact on home sales, dynamics of sales to software systems adoption

Social political issues

New regulation that will help, hurt us (financing, security installation, etc.)

Situational Analysis

Market size
Compile list of top 10, 25, 100, 1000 to evaluate size and characteristics Compile secondary research (reports) to validate sizing

Market segments 5 questions to evaluate

Smaller homogeneous subsets of overall heterogeneous market (will one product satisfy the wants of everyone within the market? (size, sophistication, platform)? Easy to identify and characterize? Easy to reach, find and promote to? Individual segments large enough to be profitable? Are all buyers in same segment responsive to similar promotions?

Organizational Strategy
Growth or Consolidation
Consolidation strategies
Determine course of action for existing product (harvesting, pruning, retrenchment, divestment)

Growth strategies
Market penetration better ingress into existing markets Product development change product or perception Market development find growth in new markets Diversification introduce new products

Strategy - Growth Potential

Market share
Percentage - justification Gaining

Sales forecast
By product By segment By region By distribution

Product/Company Positioning
The APEX of strategic analysis how do we expect to compete and grow in this space? What is our products key differentiators, unique value and positioning? What is our companys key differentiators, unique value and positioning?

Marketing Mix 4 Ps
Product
Product type, name, features, benefits, competitive positioning, buy/build or align

Price
Objectives (marketshare, ROI, sales growth, long-term profit) Strategy (22 options floor, penetration, parity, cross-benefit, etc. Structure (which products, by account, time & conditions) Levels (volume break points, site license, by product, service and peripherals)

Placement
Direct or indirect

Promotions
PR, advertising, direct response, on-line, alliance, events

Product
Review current product (install, learn, demo) Product definition
Existing product fixes (usability, bugs, enhancement request) Competition (more detailed analysis summary) Review, evaluate and contact potential alliances (align or build) New product research (or shortcut and summarize any existing)
Decisions if we believe we know most of the requirements based on previous product, we can proceed until we receive early validation and then move into Market Requirements Document (MRD) Secondary reviews and reports Primary qualitative and quantitative (to validate frequency)
Competitive matrix Internal assessment (engineering, support, QA, sales) Current customers (CIO, roundtable (person, phone, webinar), test for usability, installation, platform, features Analyst, consultants and resellers Prospects
Focus groups, trade show meetings, roundtables, phone calls, webinar

Survey prospects, analyst, resellers and have them prioritize suggested features

Product
Product definition
Summarize customer business case
Identify major problems we need to solve Evaluate which can be solved currently Create roadmap to address overall needs Quantify our savings and $ in pain

Positioning (transfer this info to strategy section) Finalize our build, align, buy strategy Market Requirements Document (MRD)
Formal as necessary to create the product (less formal, less time, more hands-on)
Functional characteristics Use case scenarios Usability requirements Performance capacity, speed, concurrency Interface/integration requirements w/3rd party hardware and software Prioritized according to a phased roadmap

Name product (review naming conventions, follow 5 step process). Not necessary until the product is defined. Warning: Never release name until press release. Name division (review naming conventions, follow 5 step process) Create brand identity (name, logos, messaging, look and feel, usage guidelines)

Product
Brand identity
Not necessary to name the product, division, etc. until the product is defined (have not even solidified its positioning until thenwhich may come into play with the naming). Always use code name. Never release name until the press release (or we dont have news). Name product (review naming conventions, follow 5 step process).
Review naming conventions (budget, abstract/descriptive/suggestive (etc.), positioning, tag lines) Brainstorm for names (that meet objectives and finalized conventions) Narrow the list and do basic name search Conduct basic and quick acid test with prospects/customers Decide final name candidates, prioritize and conduct advanced name and trademark search Finalize name do not publish until press release

Name division (review naming conventions, follow 5 step process) Create brand identity (name, logos, messaging, look and feel, usage guidelines)

Product Development
Get alliance or OEM agreement w/timeline for anything we align, versus build Review and validate our architecture to ensure modularity, standards, expandability Review product specification to ensure it maps to MRD Formal sign-off (as needed) Setup beta sites for testing, pre-sales Setup initial usability and benchmarking review Product sign-off meeting

Price - Strategy
Price distinguishes our offering from the competition and similar products. It communicates our value proposition and influences buying behavior. Review pricing for competitive and similar like products Review prospects cost for home grown and alternative application (how have they been getting the job done) Review cost for the entire system (looking for ways to reduce the overall price, not ours) Understand the overall cost (software, customization, support, maintenance)

Pricing
Pricing objectives
Marketshare, return on investment, sales growth, short/long-term profit, etc.

Pricing strategy
Floor pricing, penetration, price taker/maker (pariy), premium, crossbenefit (razor/blade software vs. customization), etc.

Pricing structure
Which products need to be priced
Software, professional services, installation, support, maintenance

Time and conditions

Pricing levels
New customer matrix, competitive upgrades, update price matrix, alliance pricing, OEM pricing, sample (NFR) pricing, reseller discounts, international pricing, gratis items, exception policies

Price sales dialogues price savings build-up, reduce to simple, price versus cost

Placement - Sales
Direct vs. Indirect trip wires Direct sales company initiative
Hire a hands on sales director/manager Setup sales compensation, commission, bonus program Recruit appropriate sales people and/or hire rep firm Prepare sales kits (see collateral) Train sales people (product, market, customers, sales training) Setup field systems (contact mgmt, etc.) Create and populate field database Setup field sales lead dissemination and follow-up system

Placement - Sales
Indirect
Program setup
Program definition reseller levels w/benefits and requirements Setup co-op, mdf policies and guidelines Reseller kit w/program descriptions
Intro letter, Reseller PowerPoint, checklist, reseller application and agreement, levels, contact information, reseller prices, part numbers, customer PowerPoint, training requirements, collateral samples, product reviews, etc.

Recruit resellers
Setup distribution agreements (Ingram, Tech Data) Identify target resellers (size, type, markets) Setup contact database and compile list Setup initial reseller database (password protected, overview of program, product info, bbscollaboration, lead dissemination and follow-up Contact and recruit (PR, alliance resellers, direct mail, VARVision, roadshow, temp firm, reseller-centric events)

Reseller training (certification, training materials, physical and/or on-line training) Reseller promotions and Co-op/MDF management - ongoing

Promotions
PR (1/7th the cost, 15 times more believable always start with PR!)
Setup
Determine objectives and measurement Company positioning statements 3-5 key talking points division and product Company backgrounder Internal media training (what to say, cautions) Establish policies (flaming, spokesperson, routing) Setup crisis management process

External PR hire PR firm Internal PR

Build target list, database and calendar
Identify and compile industry influencers (analyst, consultants, organizations) Identify and compile target publications Identify target trade events

Create master calendar Create reviewers guide

Promotions
PR
Internal PR
Proactive campaigning
Setup interviews with analyst and key executives Follow-up with executives to stay in contact with press as experts Issue press releases Setup press tour (preferably at trade events) Speak at trade show events as the industry expert Write ghost stories and submit to freelance writers Create white papers to validate companys unique value Place success and case stories On-line ombsbudsman

Follow-up and tracking

Read, correct all mistakes Setup clipping service, clip books, bulletin board communicate Calculate response and value (Media Quality Quotient Analysis)

Promotions
On-line marketing
Definition stage
Solidify objectives, consistent look and feel, PR/reseller/alliance portal, buy domain name

Building stage
Setup lead portal, product information, plan-o-gram and ecommerce CD-ROM version, site stats, on-line surveys, search engine, Web policy

Promotion stage
Metatags & key search words, submit to search engines, link to/from alliances, organizations, op-in list, announce on-line forums, affiliate program

Promotions
Alliance marketing
Setup & definition stage
Define objectives Identify potential alliances based on product, complimentary sales contacts, etc. Prioritize alliances into top 10 (most of your time spent), top 25 and self-serve (compile contacts) Define the levels, benefits and requirements Create alliance policies (screening criteria, process) Setup self-serve alliance info for non-top 25 and above Alliance kit
Intro, benefits, agreement, NDA, logo usage, hi-level roadmap, calendar, order form, contacts, workshop agenda, alliance PowerPoint, Titan sales script and presentation (cross-selling), alliance portal

Recruiting stage
Contact top 10, sign agreement, setup workshop dates, contact next 25

Development, sales and promotions stage

Complete alliance workshop, issue alliance press release, link web sites, add to alliance portal, exchange demo software/training materials, prepare an alliance promotions plan and follow-up

Promotions
Advertising
Determine objectives Review competitors campaigns (if any) Adscope, personal clippings Determine target audience (buyers, influencer, resellers) Media selection (order trade pubs, review demographics and editorial schedules, initial media selection) Create ad concept, copy and design (Z format, direct response w/offer) Determine frequency, negotiate placement, submit ads Create on-line direct response landing page Measure and evaluate media, message and response

Promotions
Event marketing
Roadshow for resellers and prospects
Prospects 1st half, resellers 2nd half

Trade shows
Attempt to exhibit in alliance booth If own:
Determine who will coordinate Booth size Rent or buy a booth Pre-show activities Post-show follow-up Lead dissemination and follow-up Show report

Collateral
Price list and matrix Customer PowerPoints Reseller program PowerPoints Alliance PowerPoints Alliance kit Product demo script Folders w/sticker space Product packaging Product slick Sell sheet (resellers) Family brochure (if applicable) Press reprints Customer testimonials Business plan - investors Demo CD-ROM / Video Case stuides White paper Sample RFI and RFQ templates Competitive matrix (sales version) 3rd party add-on book Branded give-away items PR Reviewers guide 35 mm slides, Web versions Hi-res .jpg of key executives and products Logo usage guidelines

Marketing Budget
To be added, depending on programs and ability to use existing resources Process, first we create the promotions with the expected ROI, then we get sign-off Note: Be prepared to sell your budget, by first selling and getting agreement that your promotions are needed. Under funding (and over funding) is death to your product you must cost justify

Budget Summary Expense/ROI

Channel Marketing recruit new resellers, sell more through existing resellers (increase recommendation rate). Expense: $160k + Channel Mgr Return $4.9 million. Advertising new product announcements, generate leads for sales and resellers. Expense: $416k (50% new verticals) Return $1.8 million. Promotional PR generate leads, credibility and awareness. Expense: $144k + PR Manager (contractor). Return $2.3 million. Events generate leads, customer, consultant, reseller and press meetingsonly ASIS 03. Expense: $338. Return: $513k Customer & Reseller Conference customer, consultant and reseller support, presell on-going releases. Expense: $320k ($320 CASI, $110 other divisions). Collateral product catalog, price lists, CDs (support material), reseller sales kits, data sheets, etc. Expense: $394. Return: Cost. Required to sell the products.

Channel Marketing
Promotions
Direct Response
2,000 targeted locations $8k
ROI: 2,000 x 5% response = 100 leads x 10% conversion = 10 resellers x $100k/reseller/1st year = $1 million

Reseller database list - $5k ROI: Needed to run campaign

Events
Reseller Roadshow (10 cities, $80k less contribution) - $25k
ROI: 10 cities x 25 resellers/each x 10% conversion = 25 resellers x $100k = $2.5 million

Reseller Collateral ((brochure, binders) (2,000 x $50/ea)) $100k

ROI Necessary to run the program.

Summary
This process is exactly how products like Netscape Navigator were published and launched. This process helped create the worlds largest services company (launching over 400 products and over 1 million promotions) This process helped companies like HP, Corel, Microsoft, Motorola, and GE There is still a lot of expertise involved in knowing how to execute each phase of this plan and get a high-tech startup off the ground. The process is not secret, and not particularly brainy (besides, it was condensed), but it works and should be helpful in jump-starting your future startup efforts.

Resources
To find out more, visit my industry resource, Chanimal The Ultimate Resource for Software Marketing at www.chanimal.com. It has over 53 megabytes and 250+ pages of FREE real-world startup tips and tricks (sample marketing plans, packaging guidelines, examples of how to do product research, budget templates, etc.). It is compiled content from some of the best high-tech marketing folks in the world and is all free. Also, check out practical, real-world books like, The Product Marketing Managers Handbook for Software Marketing by Rick Chapman. Also, check out In Search of Stupidity, 20 years of high-tech marketing disasters. Some of us lived through many of the mistakes this book references. We can all learn a lot from seeing what didnt work.

Any Questions?