Is having a Good Product enough? An entrepreneurial journey usually begins with a unique idea. Everyone seems to have it in abundance these days. Only a few out of these dreamers have the conviction to convert that idea into a reality. These few serious founders cross the first major hurdle of a Startup’s milestone by building a good product, or most of the times just a Minimum Viable Product (MVP) to test the waters and pitch it to consumers and VC’s.
Many of these first time founders usually get lost in this journey of making the perfect and most unique product, that they forget to understand that building a good product is just the first step of the Startup’s challenges. They hit a hard brick wall and get brought down back to earth when they realize that there is no big line of consumers fighting to try or use their product. They wonder why nobody else is seeing the vision that they dreamed of, and why is there no traction or interest. This is when they ask the most important question of all – How do I sell my product?
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Reasons why having a Good Product isn’t enough
Building an amazingly good product is nice, but what is it’s use or purpose if nobody is even aware about it, expect your family and a few friends from your social group (who might also not be the target consumer of your product)? These founders fail to realize that great entrepreneurs were also almost always amazing storytellers and even more amazing salesmen.
Yes, we have been ingrained to hate all those sales calls, TV ads, pop-up ads on the internet, YouTube ads, etc. We have all been major supporters of ad blockers too. But we do need to understand, why do those corporations from big to small always ready to burn money into marketing and sales? They are not fools to waste their money away just like that. Hell, one of the world’s most recognizable brand McDonald’s spent $388 million on advertising in 2023. Coca Cola the world’s biggest beverage brand spends around $4 Billion per year on advertising and marketing. They surely do know what they’re doing, as market leaders.
People who have studied business already know the importance of 4 P’s of a marketing mix, i.e, Product, Price, Place and Promotion. You can read more about it here in detail.
Pricing Objective of your Product
Many of these first time founders are so consumed in the first P (product), that they do not focus on the other three P’s which make their startup successful. You cannot price the product as per your wishes, and consider the consumer to gobble them up, just because you have built an astonishingly good product. You need to first asses the actual making cost (raw material, manpower, internal fixed variable costs, operating expenditures, etc.) and come to a base conclusion of your capital expenditure costs.
You cannot just blindly add a profit margin over your expenses, but instead have to consider many other factors. You need to consider the purchasing power of your target audience, and what is the price perception they have in their mind. You need to work on the market demand, if there is any. Then look into competitor pricing and have to decide if you are going to charge lower than them or somewhere near to their pricing.
You can also consider charging higher prices, if you really believe that your product/service has an edge over the competitors, and you have a USP which they do not. But, it is still advisable to keep pricing competitive if you want to snatch away your competitors market share.
Other important factors to consider before pricing your product are asking yourself the questions of what the actual market size is, what is the Product Life Cycle of your category, what the market growth rate is, what the strength and size of your competition is.
Placing Your Product in the right place
You finally have a really good product, and you have cracked the pricing too. Now you need to figure out which are the right places to sell your product. You cannot go and sell a Non-veg food product in a Veg dominated area, or sell an air cooler in an hill station, or try to sell Macbooks to Tier 2-3 cities school and college students. It doesn’t just make any sense to waste your time and resources trying to pitch your product at the wrong place.
You need to build strategic partnerships and explore the correct domain to sell your product, be if online or offline. You can also make use of the 80/20 rule, where 80% of your revenue is generated from 20% of the consumers. Target that 20% well and keep those consumers happy and satisfied, and it is a big win to your startup.
Promotion is not just Advertising
When you think of promotion, the first thing that comes into your mind is advertising or giving out offers on sale. But promotion is more vast than that, and goes a long way in making your startup successful. A great example of it is Zerodha, which has allegedly not spent any major amount at all in marketing. Their robust platform and user experience itself is a promotion for them, where consumers spread the good qualities of their product through word of mouth. They have given a good explanation in a video named – Why Zerodha with Nithin.
Another great example out there is Apple, who is not famous for advertising iPhones much, but let’s it’s products speak for itself. Even Apple has sometimes tweaked their strategy and promotes their products in various forms.
But there are companies which do not promote at all, yet have let their product speak for them through consumers. A few of those companies are Lamborghini, Rolls Royce, Zara, Tesla, etc. A single strategy or promotion model doesn’t work for everybody though. You have to decide what niche you are targeting, what pricing value your product is, what your USP is, what MOAT does your product maintain, and what is your customer retention value. You can also use AI tools to your advantage.
Success or Failures are never constant
All the advice mentioned above can make a startup become a unicorn if followed religiously, or some can defy it all and do something out the box and still succeed. But you should always remember that for every Tesla or Apple or Zerodha, there are thousands of them which fail irrespective of following the rules or not following them. Many successful startups started only to solve a valid problem, and later on pivoted into becoming companies and organizations.
But the most important factor to remember is not just having a good product is enough, having them broadcasted to consumers in the right place at right price and at the right time is very crucial for a startup’s success. If even after having all the things right too can lead to a startup’s failure, it is okay. Sometimes you are just having a bleeding edge. You should not be dejected but can always start something new again and solve another great problem of the society.
Having a good product is the first big hurdle of a startup. Figuring out the rest of the marketing mix is the real winnable move. Hope this helps, fellow Desi Founder! You can find even more startup tips here.