Results of my master thesis on startup marketing

The work deals with the strategic and operational aspects of marketing in internet-startups. New technologies such as the internet created new potentials for the digital age and enabled new business models to become vital. After the shock of the dotcom bubble this economy gained traction and constantly evolved. Influenced by newly developed startup ecosystems in the German-speaking countries of Europe, there has been a new wave of founding that brought numerous successful internet-startups to existence.

In the understanding of marketing as a comprehensive customer-and market-oriented model of thinking, the work examines which strategic and operational concepts have been applied in successful internet-startups in various stages of their growth. The results give a very realistic picture of corporate practice, which is determined by an intuitive and opportunistic approach in the early stage and an in-creasing professionalization coming with the steady upgrowth.

Four key aspects as potential success factors have been identified from the results:

  • Trial & Error-approach
  • Short time to market
  • Localization of the product/service
  • Scalability of the processes

They have been put together in an impact model that represents the main output of the work:

Modell Startup Marketing_002From the impact model we can conclude the following declarations for the different stages:

Early stage

  • Efficient product development and rapid build-up of the distribution have a positive influence on the time to market.
  • The informal strategy in this phase supports faster product development and thus a shorter time to market.
  • The communication depends on a brand definition and a partially developed product.
  • A faster time to market increases the chances of success (pioneer strategy).
  • The marketing spirit in the organization promotes error tolerance and allows a trial and error approach.
  • Incremental product development and a constant testing of the communication channels leads to better results (trial and error approach).

Later stage

  • A formal strategy supports localization and helps to synchronize the different geographical markets.
  • The formal strategy supports the decentralized organization of the marketing team and can coordinate all activities across the various markets.
  • The Product and the communication activities are required to be adapted to each country to work there efficient (localization).
  • The formalized and decentralized organization leads to scalability.
  • Distribution and communication activities must be scalable.
  • The strategy takes the coordinating role of all activities in order to achieve localization and scalability.
  • Scalability is a prerequisite for an economically growth.

The goal of the work was to identify strategic and operational aspects of marketing that are used in successful internet startups. Splitting again into the to growth stages, we can conclude:

Early stage

  • Opportunistic approach in the early stage.
  • Segmentation and positioning happens as part of a marketing concept.
  • Product development and rapid market entry as the central tasks. 
  • Lack of market research is compensated with customer integration.
  • Communication is the main activity in the marketing mix.
  • Use of various communicative channels.
  • The most important communication channels are online marketing, TV and PR.
  • Marketing as a leadership spirit in the company is promoted by the founders.

Later stage

  • Strategy rather than opportunistic approach.
  • The availability of cash is a key factor in the choice of a growth strategy:
    • Little money available -> bootstrapping
    • A lot of money available -> get big fast
  • scalability of the core processes is crucial for economical success
  • Communication is the key element in the marketing mix
  • Online marketing and search engine marketing are well scalable methods increasingly used
  • Mass media like TV can be used for rapid growth
  • The combination of TV and online marketing has been confirmed for e-commerce as the most effective combination. 
  • Customer lifetime value and CRM are gaining importance. 
  • The product development relies heavily on feedback from the  customers. 
  • A centralized marketing organization is suitable when operating on a few markets that are very similar. 
  • A decentralized marketing organization is suitable for companies with a large number of different markets to ensure a localization. Assistance can offered by a marketing service center.

The results of my work show how marketing is practiced and used in successful internet startups. However, it still requires further quantitative research to examine the success effectiveness of each aspect.

But I hope that I gathered some new insights that will help new and existing startups to optimize their marketing activities.

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Introducing my thesis on Startup Marketing

startup_marketing
In 2012 I started a master degree and as time passes by really quick I am now in my last month of the program. As common in any master program I also have to write a master thesis. I chose not to write not the 53th or something useless thesis on social media but to deal with a nowadays very popular field, namely internet startups. Since the overall web2.0 hype the number of new companies in this area is constantly increasing and a few of them are extreme successful in their business. So I wanted to take a deeper look at some of these successful companies and find out what made them successful. Of course the main reason I could tell you without doing any research, is a portion of luck. But I wanted to go further and explore especially in the field of marketing if there are any strategic behaviours or executive patterns that makes a company successful.

May of you now might think the the whole field of success factor research is a dead end, just see PIMS for example. I am absolutely aware of the fact that all the big success factor studies have not quite a valuable output at last. And more than that I know that my research will not be the holy grale of startup success but I think the results can give new startups a set of patterns to follow and orientation that is proven by market leader companies.

The main aim of my research is to find out strategic and operative patterns uses by very successful e-commerce startups in their early stage and in their later stage. The more interesting part here is the later stage and the formulas of each startup to drive growth. As far as I reviewed the insights so far on that field, it is possible to create a theoretical scale model here that can be applied to other startups.

For the research I conducted interviews with CEOs or CMOs of e-commerce startups in the German speaking region. All the companies have steady revenue and employer growth as I define with this 2 parameters the economical success of a company. I limited the research to companies with an e-commerce business model, that means these companies are selling physical goods over the internet. I think this business model is one of the most exciting ones among internet startups because it requires to deal with a lot of different aspects of marketing to work really good.

Another point I want to mention now after speaking to the executives of some companies is that hardly any of them know exactly the terms when it comes to marketing. Marketing is always used as a synonym for communication and vice e verca. Also strategic and functional marketing terms are mixed so often. I don’t know why these terms you learn in every business school are not used in the right way out there? I have no answer on that…

That was a brief introduction of my thesis so far, I will keep you updated with result and insights.

2 Tages Biketour mit Übernachtung am Berg

Nach unzähligen Tagestouren hab ich mir für den Sommer mal ein neues Abenteuer raus gesucht: 2 Tages Radtour inklusive Biwaken am Berg. Ich war wieder einmal in der Region Rund um den Hochwechsel unterwegs und der Plan war irgendwo nahe Gipfel zu übernachten. Kleiner Hinweis dazu: es ist von jedem Bundesland einzeln geregelt ob im Ödland (= Land oberhalb Baumgrenze) frei übernachtet werden kann. In den meisten ist es allerdings verboten und nur als Not-Maßnahme erlaubt.

Trotz Hochsommer im Tal mit über 30 Graden, war es am Berg richtig kalt – besonders am Morgen vor dem Sonnenaufgang. Dafür entschädigt dieser Moment für das nächtliche Bibbern im Schlafsack:

Noch ein paar Impressionen von Natur und Schlafplatz: