Marketing That Works: How Entrepreneurial Marketing Can Add Sustainable Value to Any Sized Company

This practical guide shows how to use modern entrepreneurial marketing techniques to differentiate your company in the eyes of customers to achieve sustainable profitability. The authors focus on innovative strategies and tactics, pioneered by some of today’s most successful and disruptive companies, including Google, Quidsi (diapers.com), Apple, Victoria’s Secret, Anki, Pebble, Metricstream, and Warby Parker. These high-impact methods will help entrepreneurs achieve immediate, bottom-line results through more effective marketing.

Based on The Wharton School of the University of Pennsylvania’s pioneering Entrepreneurial Marketing course, this edition is fully updated to reflect what works in the marketplace today. Guided by the authors’ collaboration with dozens of high-growth companies, it offers new insights into which marketing programs and distribution channels are likely to succeed, and how to leverage them in your unique business environment—even with limited resources.

The authors begin by helping you refine your competitive positioning by clarifying “What am I selling to whom?” and “Why do they care?” Next, they guide you through the fundamentals of demand generation via public relations, social media, viral marketing, advertising, distribution, and marketing-enabled sales. Finally, they provide you with valuable tips on how to secure the right human capital resources to build the team you need to succeed. Each of these core concepts is illustrated with real-world anecdotes that provide fresh insights into traditional marketing concepts.

Pragmatic from start to finish, Marketing That Works, Second Edition, is for marketers who care about both long-term strategies and short-term results.

• Leverage cutting-edge, entrepreneurial techniques to get your positioning and pricing right

• Generate, screen, and develop great new marketing ideas to reach your target audience

• Lead your customers to your offering—and motivate them to buy

• Cultivate the right people and resources for outstanding execution

This guide offers high-value, low-cost marketing solutions that leverage today’s newest trends, tactics, channels, and technologies. It highlights companies that are redefining marketing and illuminates powerful new ways to secure resources, test and execute plans, and build brands.

The authors present practices for getting close to customers, reinforcing positioning, and developing marketing programs. Wherever you compete, this guide will help you grow your sales and profits, and drive more value from every dollar you spend on marketing.

For more information about Marketing That Works, visit www.marketingthatworksbook.com.

• Social media and network externalities (Facebook, Twitter, Waze, Vendop, Dropbox)
• Advanced social marketing techniques (Fab, Uber, DogVacay)
• Localization and micromarketing (Milo.com)
• How to leverage your customer's mass migration to mobile
• Marketing-enabled sales, and the cultivation of customer relationships and communities (MetricStream, Regalix)
• Virality: how you can develop messages that desperately "want" to spread
• Marketing to the consumerized enterprise
• New approaches to increasing customer retention and strengthening lock in (Amazon Prime, Quidsi, Diapers.com)
• Financing your marketing: cost effective ways to establish value, including crowdfunding (Pebble), Lean Startup, for quickly building and testing concepts and companies, and accelerators (Y Combinator, DreamIt)

Wherever you compete -- no matter how large or small your company is -- this guide will help you grow sales and profits, strengthen your brand, and drive more value from every dime you spend on marketing.

Discover new entrepreneurial marketing strategies and techniques for supercharging profits now, and sustaining long-term competitive advantage! Marketing That Works, Second Edition delivers high-value, low-cost marketing solutions that fully leverage today's newest trends, channels, and market opportunities. Based on The Wharton School's pioneering Entrepreneurial Marketing, this edition adds nearly 50% new coverage – highlighting new companies that are redefining marketing today, and illuminating emerging approaches to securing resources and promoting your offers.

You'll discover powerful new best practices for social, PR, promotion, advertising, and much more: techniques for getting closer to your customer, reducing acquisition and retention costs, reinforcing positioning and differentiation, and much more. Four cutting-edge marketers present new or extensively revised coverage of:

• Social media and network externalities (Facebook, Twitter, Waze, Vendop, Dropbox)
• Advanced social marketing techniques (Fab, Uber, DogVacay)
• Localization and micromarketing (Milo.com)
• How to leverage your customer's mass migration to mobile
• Marketing-enabled sales, and the cultivation of customer relationships and communities (MetricStream, Regalix)
• Virality: how you can develop messages that desperately "want" to spread
• Marketing to the consumerized enterprise
• New approaches to increasing customer retention and strengthening lock in (Amazon Prime, Quidsi, Diapers.com)
• Financing your marketing: cost effective ways to establish value, including crowdfunding (Pebble), Lean Startup, for quickly building and testing concepts and companies, and accelerators (Y Combinator, DreamIt)

To help you systematically optimize your marketing investments, Marketing That Works, Second Edition integrates Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV) benchmark metrics throughout.

Whatever your size, wherever you compete, this guide will help you grow sales and profits, strengthen your brand, and drive more value from every dime you spend on marketing.

LEONARD LODISH, PH.D. (Philadelphia, PA Area) is Samuel R. Harrell Professor of Marketing at The Wharton School. He is co-founder and Chair of Wharton's Global Consulting Practicum, and innovator of Wharton's MBA Entrepreneurial Marketing course. His research specialties include marketing decision support systems, marketing experimentation, and entrepreneurial marketing. He has consulted with clients ranging from Procter & Gamble and Anheuser-Busch to Tropicana and ConAgra.

HOWARD L. MORGAN (Greater New York City Area, NY) is Director and former Vice Chairman of Idealab, the pioneering internet incubator; and founder and partner in First Round Capital, an early stage venture capital firm. He has served as Professor of Decision Sciences at The Wharton School and Professor of Computer and Information Sciences at The Moore School of the University of Pennsylvania, and as Visiting Professor at the California Institute of Technology and Harvard Business School.

SHELLYE ARCHAMBEAU (San Francisco Bay Area, CA) is CEO of Metricstream, Inc., a recognized leader in compliance and governance. She previously served as CMO and EVP of Sales for Loudcloud, Inc., responsible for all global sales and marketing activities. There, she led Loudcloud's transformation into an enterprise-focused company while growing sales by 50 percent year over year. As President of Blockbuster, Inc.'s e-commerce division, she was recognized by Internet World as one of the nation's Top 25 click and mortar executives.

JEFFREY BABIN (Philadelphia, PA area) has 25+ years of experience practicing, teaching, and consulting on innovation for organizations ranging from Fortune® 500 clients and emerging companies to universities. He is managing director and founder of Antiphony Partners, LLC, a strategy consulting firm that helps companies create sustainable value through innovation. He previously founded Corporate Technology Ventures, growing it into one of the nation's premier medical software publishers. He is now senior lecturer and associate director in Engineering Entrepreneurship at the School of Engineering and Applied Science (SEAS) and is senior project advisor and Australia, India, and Israel country manager for the Wharton Global Consulting Practicum, both at the University of Pennsylvania. Babin is Wharton Venture Initiation Program advisor, an entrepreneurial fellow for the Weiss Tech House, and founding member of the Mid-Atlantic Angel Group Fund.

The Authors’ and the Book’s Heritage     3

The Importance of Marketing     4

One Positioning, Multiple Stakeholders     6

Challenges of the Next Decade     7

SECTION ONE:  MARKETING STRATEGY--REFINE YOUR OFFERING AND POSITIONING     11

Chapter 1  Marketing-Driven Strategy to Make Extraordinary Money     13

Orvis Company--Excellent Entrepreneurial Positioning     13

Positioning to Enhance the Value Proposition     14

Getting Started: Segmentation and Targeting     16

    Virtual Communities: The Ultimate Segment?     17

    An Entrepreneurial Segmentation Example--Tandem’s East     18

    An Entrepreneurial Segmentation Audit     20

Gaining the Competitive Advantage: Differentiation     22

    Distinctive Competence and Sustainable Competitive Advantage     24

Tying Together the Value Proposition: Distinctive Competence, Sustainable Competitive Advantage, and Positioning     27

    Victoria’s Secret and L Brands--Excellent Integration of Positioning, Segmentation, and Distinctive Competencies     29

Positioning, Names, and Slogans     31

    Hindustan Unilever Limited: Positioning and Targeting to the Bottom of the Global Pyramid     33

    The Unmet Need     34

Summary     39

Endnotes     39

Chapter 2  Generating, Screening, and Developing Ideas     41

Idea Generation and Testing at Idealab     41

Evaluating Specific Venture Ideas     42

    Finding More Receptive Battlefields     43

Dry Tests, Crowdfunding, and Concept Testing: What They Are and Where They Are Best Used     46

    Getting Customers to Part with Money: The Real Tests of Value     46

    Victoria’s Secret Uses Their Stores as Test Beds for New Products and Brands     48

    Testing Purchase Intention: The Concept Test    49

    How to Do Concept Testing--the “Nuts and Bolts”     50

    Best Practices and Uses for Concept Testing     56

    Caveats for Concept Testing     60

Trakus: The Value of Concept Testing     61

Summary     65

Endnotes     66

Chapter 3  Entrepreneurial Pricing: An Often-Misused Way to Garner Extraordinary Profits     67

Determining Price at Warby Parker     67

Pricing to Create and Capture Value     68

    Price and Perceived Value     70

    Getting Price Right Early--It’s Hard to Raise Prices Later!     71

    Perceived Value in Use for Business-to-Business Products     72

    The SAS Institute, Inc.--Very Effective Management of Perceived Customer Value     74

    Pricing of Intellectual Property     77

    What Else Can Impact Price Response?     79

    Customer-Determined Pricing     80

    Revisiting Costs in Determining Price     82

Methods for Determining Revenue at Alternative Price Levels     84

    Premarket Methods--Pricing and Concept Testing     84

    In-Market Methods     90

Victoria’s Secret Can Use Its Many Stores for In-Market Experimentation     95

Summary     96

Endnotes     97

SECTION TWO:  DEMAND-GENERATION AND SALES--LEAD YOUR CUSTOMERS TO YOUR OFFERING     99

Chapter 4 Leverage Public Relations for Maximum Value     103

PayMyBills.com--Battling Competition with Public Relations     103

Aspire to Be a “Winner”     104

Gaining the Perception of Leadership     105

    Spokespersons/Evangelists     109

    Linkage to Fund-raising     111

    PR Agencies     112

    Timing Is Essential     113

    Crisis Management     114

Summary     115

Endnote     115

Chapter 5  Promotion and Viral Marketing to Maximize Sustainable Profitability     117

The Coolest Cooler--One of Kickstarter’s Most Successful Campaigns     117

Methods for Promoting Products and Engaging Customers     118

Give It Away     119

    Free Trials Versus Free Forever Versus Freemium     121

    Key Metrics for Free Trials to Pay     122

Viral Marketing     123

    Using Social Media for Viral Marketing     125

    When Do Giveaways Work?     126

Event Marketing     128

    Consumer Events     130

Product Placement     131

Winning the Tchotchke Wars     132

Summary     134

Endnotes     134

Chapter 6  Advertising to Build Awareness and Reinforce Messaging     135

Synygy Generated Productive Ad Options for Low Cost     135

Moving to More Effective Advertising     138

    Even Large Firms Waste a Lot of Their Advertising Expenditures     139

    How Entrepreneurs Can Improve the Productivity of Their Advertising     141

Improving Campaigns     141

    The Hindustan Lever (HLL) Missed Experimentation Opportunity     145

    Victoria’s Secret’s Advertising and Testing Strategy     147

Evaluating Campaigns--“Vaguely Right” Versus “Precisely Wrong”     148

    A National Retailer’s Campaign Evaluation     149

     “Vaguely Right” Entrepreneurial Marketing Experimentation     153

    Evaluation Before Is More Valuable than After     154

Media Planning     157

    Sample Template for Media Evaluation     158

The Digital Marketing Revolution--Evaluating and Maximizing Its “Bang Per Buck”     163

    Display Ads     164

    Search Engine Optimization     166

    Evaluating the Return on Search Engine Marketing     170

    Methods for Improving Productivity of Search Engine Marketing     171

    SoLoMo, Personalization, and Other Emerging Digital Advertising Concepts     172

Summary     174

Endnotes     174

Chapter 7  Distribution/Channel Decisions to Solidify Sustainable Competitive Advantage     177

Anki--Emerging from Stealth Mode with Help from Apple     177

Making Distribution Decisions     179

Required Functions of Any Distribution System      180

    Evaluating Distribution Options, a Disintermediation Example     182

    Revisiting Positioning in the Context of Distribution     183

    Other Aspects of Distribution System Design--Direct Versus Indirect     184

Owning Your Own Distribution--The Highest Control     185

    Victoria’s Secret and the L Brands’ “Own Store” Channel Strategy     186

Indirect Distribution and Exclusivity Alternatives     188

    Exclusive Distribution     189

    Anki DRIVE--Launched by Exclusivity     190

    Evaluating Channel Exclusivity     191

    Item Exclusivity     193

Intensive Distribution     194

Selective Distribution     195

    Brooks Sports--Integrating Selective Distribution with Effective Positioning and Segmentation     196

    Preservation Hall Jazz Bands--A Selective Distribution Example     198

Types of Intermediaries--Earn Your Partners in Distribution     199

    Neat, Co.--Using Kiosks (Direct Sales) to Earn Distribution     200

    Nice Systems--A VAR Example     201

Dynamic Distribution Management     202

    Superscope, Inc.--Couldn’t Achieve Balance     203

    Franklin Electronic Publishers     206

Franchising: Still Another Distribution Option     207

    Different Types of Franchising     207

    From the Franchisee’s Point of View     208

    From the Franchisor’s Point of View     212

    Rita’s Water Ice--A Successful Franchising Venture     215

Managing and Anticipating “Channel Conflict”      218

Concept Testing to Channel Members     222

Summary     223

Endnotes     223

Chapter 8  Sales Management to Add Value     225

Plantronics     225

The Role of the Sales Management     226

Type of Sales Forces     229

    Direct to End User     229

    Resellers, Distributors, and Retailers     230

    Value-Added Resellers     231

    Agents, Brokers, and Representatives     231

The Control Issue: Choosing Your Sales Force     233

    What Situations Favor Direct Versus Rep?     233

    Choosing Reps     235

    Effective Rep Management     236

    Rep Management and the Perceived Value Proposition     237

    Direct Sales: Personal Versus Telephone Versus the Web and Other Nonpersonal Sales     238

    IndyMac: Using Both Direct and Indirect Sales Channels     241

Sales Force Size, Deployment, and Organization     242

    Sales Force Size and Deployment     242

    Deployment with Limited Sales Force Size     244

    Sales Force Organization and Travel Costs     245

Compensation     245

    Matching Incentives     245

    Outback Steakhouse--Perfectly Matched Incentives     247

    Incentives Versus Control Versus Time Horizons     247

    Compensation for New Versus Existing Customers, a Possible Festering Problem     248

    The Shadow Broadcast Services Example     249

Recruiting, Training, and Retention Strategies     252

Summary     254

Endnotes     255

Chapter 9  Marketing-Enabled Sales     257

MetricStream, Inc., and the Marketing-Enabled Sales Strategy     257

Marketing Tools to Support the Sales Process     258

Help Prospects Find You     260

Gain Prospect Interest and Trust     261

    Company Website     264

    Traditional Advertising     265

    Pay per Click (PPC) Advertising     265

    Social Media     267

    Webinars     268

    Trade Shows     269

    Blog Posts     270

    E-Mail Campaigns     270

Qualify Prospects and Identify Prospective Buyers     271

    8x8 Reinvigorating Dormant Prospects     272

Drive Toward the Close     274

    Submit the Proposal     274

    Check References     278

    Handle Objections     278

Close the Deal     280

Training Is Necessary     280

The Relationship Between Marketing and Sales     281

Summary     282

Endnote     283

SECTION THREE:  EXECUTION--CULTIVATE THE PEOPLE AND RESOURCES TO MAKE YOUR MARKETING WORK     285

Chapter 10 Create an Ecosystem to Maximize Product/Service Lifetime Profitability     287

Pebble: The Start-Up Taking on Multibillion-Dollar Global Companies     287

Engaging Your Customers in Product Launch     289

The Beta Process     292

Reference Accounts     296

    Reaching Target Reference Customers     298

    Establishing a Compelling Offer     298

    Building an Internal Resource Plan to Ensure a Successful Launch     300

Securing External Support for Your Product     302

Partnering for Launch     304

Channels of Distribution     305

Summary     306

Endnotes     306

Chapter 11  Entrepreneurial Marketing for Building Teams     307

Anki: From Classmates to a Company     307

Positioning for Talent     309

    Segmentation: Understanding the Needs of Company and Employees     309

    Differentiation: Setting Yourself Apart     312

Building a Team and Corporate Culture     313

Reaching the Prospects     315

Choosing the Prospect     317

Compensation: Pricing Your Talent     322

Summary     323

Endnotes     323

Chapter 12  Marketing for Financing Activities     325

Pebble: Preserving Equity with Crowdfunding and Venture Funding     325

Financing: A Different Product for a Different Customer     327

Product Versus Financial Marketing     329

    A Financial Marketing Plan     329

    The Buying Center     331

Segmentation of Investors     332

    Crowdfunding     332

    Angels     333

    Venture Capital Firms     334

    Incubators and Accelerators     335

    Corporate Strategic Partners/Investors     336

    Institutional Investors     337

Naming     337

Pricing--The Value of Your Venture     338

Venture Marketing     339

Initial Public Offering (IPO)     340

Investor Relations     341

Summary     343

Endnotes     343

Chapter 13  Building Strong Brands and Strong Companies     345

Why Is It Hard to Build Brands?     347

    Can Entrepreneurial Marketers Overcome These Eight Difficulties in Building Brands?     354

Ten Guidelines for Building Strong Brands     355

Summary     358

Endnotes     358

Index     359

The #1 actionable guide to entrepreneurial marketing — now fully revised for the latest high-value techniques, channels, and metrics!