Entrepreneurship Innovation Marketing Jun 8, 2016

Three Tips for Design­ing a Startup’s Mar­ket­ing Plan

Even in R&D-focused industries, you don’t need to rely on a heavyweight to swoop in and buy your innovation.

akindo via iStock

Based on insights from

Katie Arnold

Say you are an entre­pre­neur look­ing to make a big splash in the med­ical tech­nol­o­gy indus­try. Your new rapid test for bac­te­r­i­al infec­tions will make emer­gency rooms more effi­cient and reduce how long it takes to train hos­pi­tal staff. You are con­fi­dent that big firms will want to acquire the tech­nol­o­gy — prob­a­bly out­bid­ding each oth­er for the prototype.

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As tempt­ing as this sounds — and as sure as you may be that it will pan out — there are ben­e­fits to a more patient, self-sus­tain­ing approach.

Katie Arnold, the founder of SPRIG Con­sult­ing and an adjunct lec­tur­er of inno­va­tion and entre­pre­neur­ship at the Kel­logg School, advis­es star­tups to design a mar­ket­ing plan to take them from con­cep­tion to com­mer­cial­iza­tion — with­out rely­ing on a heavy­weight swoop­ing in to buy.

In research-heavy indus­tries such as medtech, phar­ma­ceu­ti­cals, auto­mo­tive engi­neer­ing and mil­i­tary tech­nol­o­gy, a thor­ough mar­ket­ing plan is crit­i­cal for guid­ing prod­ucts through devel­op­ment process­es that can take up to a decade.

It also serves a sec­ond pur­pose. Hav­ing a com­pre­hen­sive mar­ket­ing plan ear­li­er in the devel­op­ment process makes dis­cus­sions with poten­tial acquir­ers go more smooth­ly because they can envi­sion how the oppor­tu­ni­ty may come to fruition with­in their com­mer­cial infra­struc­ture,” Arnold says.

Arnold shares three pieces of mar­ket­ing advice for star­tups in sec­tors that have long R&D timelines.

Deter­mine Where Your Company’s Prod­uct Fits Rel­a­tive to the Big Play­ers’ Priorities

The big fish in any R&D-heavy indus­try — for instance, Abbott, Bax­ter, and Medtron­ic in medtech — tend to pri­or­i­tize exter­nal growth oppor­tu­ni­ties that can then be mar­ket­ed via their exist­ing chan­nels for dis­tri­b­u­tion and sales. These giants count on star­tups and small­er firms to feed them viable prod­ucts in grow­ing areas — and, if the prod­uct aligns with their pri­or­i­ties, they pay hand­some­ly for those innovations.

So does your prod­uct make the cut?

Often for R&D-heavy indus­tries, the mar­ketabil­i­ty of rev­o­lu­tion­ary prod­ucts is unproven, as these prod­ucts will either cre­ate new mar­kets or dis­place exist­ing mar­kets. The key for a start­up is to thor­ough­ly assess the mar­ket by deter­min­ing its size, growth poten­tial, and how open it is to new products.

Find big mar­kets with sig­nif­i­cant unmet needs, and then go build prod­ucts to meet those needs based on dili­gence and infor­ma­tion you are receiv­ing from the market.”

When you’re in it for the long haul, you want to be in a mar­ket that’s attrac­tive,” Arnold says. Look at the large and grow­ing mar­kets that estab­lished com­pa­nies might think of as the next area of inno­va­tion. You don’t want to be in a declin­ing mar­ket that has com­mod­i­ty-like pric­ing, or else you’ve put in a lot of time, mon­ey, and effort that may not result in an exit.”

Estab­lish Coor­di­nat­ed Prod­uct-Devel­op­ment and Mar­ket­ing Approach­es Early

Even if your company’s ulti­mate goal is to be acquired by a larg­er enti­ty, it still needs to be pre­pared to bring its prod­uct ful­ly to the mar­ket. After all, the build-to-be-bought strat­e­gy does not always go accord­ing to plan. Larg­er com­pa­nies may wait to acquire a prod­uct until it has strong mar­ket trac­tion. In these cas­es, ear­ly-stage mar­ket­ing can sus­tain a com­pa­ny and set it up for a stronger buy offer.

You can’t just go and build towards the next devel­op­ment mile­stone with an R&D-only focused men­tal­i­ty,” Arnold says. Instead, star­tups should con­sid­er marketability.

The best approach is to find big mar­kets with sig­nif­i­cant unmet needs, and then go build prod­ucts to meet those needs based on dili­gence and infor­ma­tion you are receiv­ing from the mar­ket,” she says.

This mar­ket-dri­ven approach requires con­stant com­mu­ni­ca­tion between prod­uct devel­op­ment and mar­ket­ing teams. While engi­neers are busy cre­at­ing pro­to­types, the mar­ket­ing team needs to be kept up to speed on the device design and how it will func­tion. Assess­ing reg­u­la­to­ry and reim­burse­ment aspects of the prod­uct, as well as con­cerns like whether a medi­al device is like­ly to be cov­ered by insur­ance, can have pro­found impact on how quick­ly the device gets to market.

In the past, we used to devel­op the device, get it approved, and then fig­ure out how to get it paid for,” Arnold says. This is no longer the case. Because of chang­ing health­care eco­nom­ics, you have to know ear­ly on if your device fits into an estab­lished reim­burse­ment code, or if it will require a new reim­burse­ment code. Giv­en that a new code can take sev­er­al years to estab­lish, the mar­ket­ing plan and relat­ed reg­u­la­to­ry and reim­burse­ment aspects of the strat­e­gy should be estab­lished ear­ly, at the same time that prod­uct devel­op­ment starts.”

Invest in Pri­ma­ry Mar­ket Research

Arnold has found that first-time entre­pre­neurs can be tempt­ed to skimp ear­ly-stage, pri­ma­ry mar­ket research, which can be labor and bud­get inten­sive at a time when most com­pa­nies are ded­i­cat­ing every­thing they have to prod­uct development.

Those who haven’t gone through the prod­uct life cycle find it hard­er to jus­ti­fy spend­ing $30,000 for three to six months of mar­ket research,” she says. But those who opt to begin mar­ket research lat­er in the process run the risk of hurt­ing the bot­tom line. The ear­li­er you test your con­cepts, the more you know you’re cre­at­ing some­thing mean­ing­ful to the market.”

Arnold finds her­self inte­grat­ing mar­ket research ear­li­er and ear­li­er into a product’s con­cep­tion. In the world of med­ical star­tups, mar­ket­ing teams seek out clin­i­cians and key opin­ion lead­ers to dis­cern their opin­ions on evolv­ing new prod­ucts. This research is used to deter­mine how the prod­uct dif­fers from cur­rent mar­ket offer­ings — and most impor­tant­ly, whether peo­ple are like­ly to use it in the future. The results can then be used to shape engi­neer­ing and pro­to­type development.

We see crit­i­cal insights — such as clin­i­cal stud­ies that may need to be per­formed — and can bring them into the devel­op­ment of the device,” she says. As soon as we can get out and talk with cus­tomers — in this case clin­i­cians and admin­is­tra­tors — the better.”

Pri­ma­ry research may, for exam­ple, lead a start­up that is devel­op­ing a device with mul­ti­ple fea­tures to rethink its design. By dis­cussing the design with clin­i­cians, the com­pa­ny can iden­ti­fy which of these ele­ments is a must-have, and which is a nice-to-have, but not crit­i­cal, prod­uct fea­ture. Know­ing this infor­ma­tion can save a com­pa­ny a lot of time and cap­i­tal on the way to market.

Featured Faculty

Katie Arnold

Adjunct Lecturer of Innovation & Entrepreneurship

About the Writer

Eugenia Williamson is a freelance writer based in Chicago.

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