On Marketing

Question

Values aside - is it applicable across the board that we need to market? My naive perception is that our products are essential, and if they are 5x cheaper, they will sell themselves. For example, we did zero marketing last year to clear the $25k in product sales - as our marketing was via simple open source publishing. I am expecting that this will scale to a much higher level automatically as the first few building are built and first few field tractors demonstrated.

Also - don't we already have publicity from TED and other networks, and bigger hits further down as we show real success, not just proof of concept?

It seems that we are in the realm of the economy of affection, not commerce. So our marketing is guaranteed? That is, the distributive enterprise concept is self-propagating?

Answer

By C. C. Thomson:

Motivation and perseverance is the key, but I want to set you up to have your worst best and average case covered, so there is NO FAILING or loss of control/mission. It is essential to be bullet proof and unwavering.

Re: Marketing

Marketing is the act of segmenting your customer base into groups (markets) and specifically targeting them with individual strategies.

Organic growth works for some products, but It's unlikely to be a rocket ship in a non-web high touch business with a non-virtual product. There is a lot of inertia behind old ideas and distribution chains, and it can be costly to overcome it.. People make comfortable easy choices and they keep products for years. It could take a decade or more before people become aware of something outside of early adopter circles. Good ideas die in workshops and sitting on shelves with the wrong branding and package design. Many people have a multi-decade equiment adoption cycle, and are unaffected by what's popular on the net. Further you will offer a different feature set with different motivations, they may not value. (for example they may value air conditioning and closed cabin over price performance and modularity)

You can destroy a superior product just by calling up people and telling them an inferior product is great and they need it, making it shinier or giving them some other nonsense incentive. Also, it's not a simple matter of winning. Products occupy a niche in an ecosystem, at a certain price point and feature set, and appeal to that subset. The more money you charge, the more money you have to push your niche toward mainstream through convincing people of its merits, but the fewer people will be interested. In business normally you price a product not according to its costs, but according to the price elasticity of demand. ie How much will people pay.

The best product does not win by itself. This is a hard marketplace truth, especially for something that's not an internet based economy.

My guess is you'll get a steady word of mouth trickle or stream that grows over time. This is only testable through execution and commitments. This is the cheap incoming business. I get a number of incoming leads every month, but I have to call up another 800 people on the phone, to get the kind of movement I need to grow fast.

To expand beyond that rate, you have to prospect for demand or engage in strategic partnerships. The latter probably makes the most sense for OSE. That is normal, even with a dramatically superior product, so it would be unusual to anticipate sufficient word of mouth expansion for you to grow at such high rates as to justify capital return.

Fortunately, its hard to scale production and distribution as well, and you don't necessarily need capital return, so all you need is to have demand keep above production without sales and marketing. That would be a rare luxury if we had it. I hope we do, but understand how rare it is... It is very possible that 3rd party entrepreneurs will take on this responsibility for us, but it will be included in the cost of goods sold and affect price competitiveness in such a way as to narrow ecosystem niche. If people make enough money building and selling OSE products, they will come up with ways to market them on their own. You can accelerate this by providing them with materials and guidance. This is what a franchise is, and this is why a franchise business like Mc Donald's has an order of magnitude higher success rate than a normal business.

For further reading on that topic : http://www.colbyt.com/assets/public/summary/E-myth.doc An alternative view: http://www.colbyt.com/assets/public/summary/Lucky_or_Smart.doc Comparison : http://www.colbyt.com/blog/2005/11/8/lucky-vs-e-myth.html (I wrote these 7-10yrs ago, so please forgive)

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There is of course another distinction here we cannot forget. If you were merely aiming to satisfy the capital markets for growth, you would build the products that had the highest demand, margin, and market potential first... or the low hanging fruit that cost the least to develop. This would gain you leverage, capital and market influence to release other products.

Instead however we may say we are pursing a methodology of ecosystem completeness, inter-working products, self-sustainability, and portfolio completion and make different choices. These two struggles are in some ways opposed, and will be a value judgement that could be in conflict between capital partners, NGO partners, and organizers.

Setting and maintaining a strategy and philosophy on this will be important. Something to watch.