Marketing is not advertising

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A young founder-CEO of a five-year-old company was worried about his company’s future. He had just learnt that his company had lost two important contracts. In addition, three other contracts had slipped out of his hands. Worse—his company wasn’t even invited to make a proposal. His company operated in a large, fast-growing but immensely fragmented industry.

In his city alone, there were over 3,000 companies competing for the same business.

The CEO had built his company into a profitable, fast-growing business with a set of well-known customers. He realised that there was a terrific opportunity to create a full-service and nationally admired company in the industry, given its charactertistics.

Starting a company just after a year working experience following graduation, there was naturally a lot of ‘seat-of-the-pants’ and ‘learning by doing’ management. His team comprised people he knew from his years at IIT. The company had grown through sheer diligence, persistence and hard work.

His organisation had clearly identifiable teams responsible for technology, operations and delivery but there was no clear sales and marketing team. The CEO and a his team members were doing all the sales which basically meant leveraging contacts to procure business. And marketing? "I don’t want to waste money advertising in newspapers as our business doesn’t need it" was his refrain.

Equating marketing with advertising is one of the most common errors made. And our CEO too was committing it! It is a legacy of our lack of familiarity with a market economy given that we’ve only been exposed to it since 1991, the year of India’s economic liberalisation. In a market-based economy, it is essential to understand the market. Market can be defined as the sum of suppliers, customers and the dynamics of interchange (e.g. pricing) between them.

Macro-economic and regulatory variables impact these dynamics. Coming down a notch from the understanding of the definition of the market in general to specifics, the following questions need to be answered:

* Who is my customer? What are the characteristics of my ideal customer. It is therefore important to understand the various customer segments, needs of each segment and size and growth opportunities per segment.