Here is an interesting article (http://goo.gl/9ZjAJ) that about whether or not an early stage startup should spend money on advertising. Is it more important to build brand awareness or use that money for customer development?  

What do you think? Tell us in the comments
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Peter Workum's profile photoDaniel Cash Kristiansen's profile photoanass taouil's profile photoDeanna Lawrence's profile photo
13 comments
 
This is marketing GOSPEL. EVERYONE needs to understand this distinction. It is the complete opposite of the Facebook way, and is THE way it should be done. Thank you for posting this. 
 
I read an article recently that said a lot of brands use advertising to build awareness about their product --- sales was their second goal for placing ads (I'll see if I can find the article). This makes sense to me to an extent. Get your name out as much as possible so people will recognize your brand and remember you when they are researching a product before they make their purchase decision. There are ways to advertise to create brand awareness that's not pushy on the sales side. BUT... no matter how much you advertise, if your product, customer service, etc... isn't up to par with your competitors then that money needs to be spent on more important things other than ads. 
 
i think advertisement is a very good investment . for brand building. as they say out of sight out of mind
 
True in many ways and extremely compatible with the Lean Startup Method. However, I don't believe you can apply this theory on all kinds of startups. In my opinion it is very well suited for hi-tech and web startups. Nice article. Enjoyed it...
 
+Pascal Gurtner I too am interested in where you feel this might not apply. Seems pretty basic to me. 
 
Maybe this works for startups with A and B funding, but not bootstrappers or even seeded IMHO . Trying to get noticed in a river of distractions is a quick way to go broke. Instead get your sales team focused and incentivized with that billboard money.
This look-at-me approach is too often sold by greedy marketers and unconcerned ad sales people.
 
I agree no advertising, but all businesses need to conduct marketing even bootstrapped startups. Even the best sales people need the business, product or service to have some level of awareness & basic lead generation.
 
Glad to have started a little discussion +J.C. Kendall +Google for Entrepreneurs . I believe that a startup within the fmcg industry for example would have a hard time applying the suggested strategy. Then again,we don't see a whole lot those these days. 
 
+Pascal Gurtner I'm going to suggest that with FMCG providers, because their products are usually commodity items that could be purchased anywhere, that the necessity for branding is even MORE crucial. There is a business I often refer to in these kinds of discussions called "The Ginger People". Their branding story is a case study in doing it right. They used to be a little twitter entity. Not anymore. 

If I am a corner-grocer, there is little to be gained by these price-wars that are so common in newspapers, etc. What is needed is a value-add proposition that makes one entity stand above the rest. A niche, be it Customer Service, Convenience, whatever. Just positive differentiation. Ads dont do that. Ads annoy, unless you're shopping. 

That corner grocer, needs to spend time learning why the people in his neighborhood are shopping across town, rather than stop at his location, regardless of his prices. He needs to know what will bring them into his store, be it a particular item, a particular brand of item. One store near me lost all of my business after they stopped carrying a particular brand of Salsa. It can be that particular. 

I would right now, in a fmcg, find out exactly what is bringing in my current customers and make a determination of whether they are the ones I want. If so, do the same better. If not, change it up, after an identification of who my target customer is, what they want, when they want it, etc. 

Only when I know that customer like the back of my hand, do I begin advertising what my customer wants. 
 
+J.C. Kendall I actually completely agree with you, since, in the case of the corner grocer, you are speaking from a reseller's point of view. You need to get your CRM right to know what to offer. However, if you are on the production side and spend an immense amount of funds in developing a product and get it to market without knowing who your customers are, I believe you would have massive problem. Does that make sense? 
 
+Pascal Gurtner Oh it totally does make sense. However, if a business invests in expensive product production without customer knowledge, you might be called WebVan or Pets.com. For a Producer of a commodity item, rather than reseller, then the onus is on the producer to identify the specific demographic retailers who have done their job on the branding side, and can assure the producer of a ready market for recurring sale-through. I dont think its a pipe-dream. 
 
That is right. They need to know who their customer is, in this case, as you've mentioned, the demographic retailer. But I think the key issue here is WHEN to have this information available. The article suggests to gather it after launching the product, so basically through CRM. I say, in the case we have just discussed, it has to happen before launching the product. Hence my initial statement that the method cannot be applied on all businesses. Unfortunately I have to check out of this conversation at this point. I will happily read you response later tomorrow +J.C. Kendall Thank you for the discussion! 
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