You know you’re up against some tough competition if you’re a budding entrepreneur on a mission in the thriving startup ecosystem of Bahrain or the broader region.
With so many quality startups unleashing themselves in the scene, standing out as an industry disrupting force can be rather herculean if you’re left undecided on internal budget allocation. And when it comes to internal budgets, one of the most commonly faced conundrums by a startup is which is worth the bigger chunk of the pie: product development or marketing?
For starters, marketing and product development are both critical functions within any organization — not just startups. Both are fundamentally different, yet relate so closely to each other!
- Marketing, in short, is how you put your energy into making things likable! More so, reaching out to elusive customers who show little interest.
- Product development, in short, is how you change your existing product/create a new product that has something to like about.
Now, the million-dollar question here is,
Which one is more Important?
If it comes to deciding which one is more important, that’s a pickle!
There cannot be a one-size-fits-all strategy, especially in the case of a startup. Of course, it is important to develop a great product, but that doesn’t mean we ignore marketing without which a great product might go unnoticed.
The key is to avoid slapdash spending and aim for efficiency combined with effectiveness.
Business Life Cycle
The solution lies in the business life cycle of a company. Where it stands on the market graph.
- A startup that is in a stage of fresh product launches, a dominant marketing strategy can help exploit the market which can help in boosting sales and building the brand.
- In a long term scenario, marketing alone cannot help in driving performance. Innovation and product improvement and development does.
- Meanwhile, if your product line is mature, profit margins will eventually fall irrespective of how good your marketing is. Here product innovation will be the need of the hour.
Marketing is majorly about reinforcing and extending the reach of the existing brand. If the product line is mature already, needless innovations also won’t help. Companies that are able to grasp the consumer pulse know when to use innovation and marketing and in what quantities to retain superior performance.
If we want to understand the performance value of both the departments, we need to know about their success metrics.
- For the product team, success should be measured by product quality, utility value, the speed of improvement and customer satisfaction.
- For the marketing team, performance metrics are centered around market expansion and growth along with customer retention and even new customer acquisition.
Performance metrics for both relate closely to each other and intersect each other’s paths. A lackluster product cannot achieve sustainable growth and an inept marketing strategy makes any product development worthless. It is important for both to work in collaboration on the same field.
While both marketing and product development might argue regarding funding pie, the truth is that both are important in their own right and deserve collaborative attention in terms of money!
- A product focussed investment takes into account product differentiation, an improvement that will lead to competitive advantage.
- The Market focussed investment includes seeking new opportunities and capitalizing on them. What are customer needs and where do they spend money? It seeks the best pathway to sustainable growth.
- Both the above will work when there is clarity of vision and direction. When a company prioritizes investment, there needs to be synchronization between product development as well as marketing since both are incomplete without the other.
- Marketing builds connections, understanding, and relationships with the marketplace on the whole and customers. This understanding drives product development, strategy and further growth plans which is deeply essential for a startup.
- While investing in marketing enables making decisions with regard to competition and customer behavior, investing in the product will bring about innovation, improvement and new features which will give enough material to the marketers to talk about.
Product development and Marketing are the two critical pillars on which a successful startup thrives. A great product and a great marketing strategy are complementary to each other and together they drive sustainable growth and revenue stream.
For marketing to be successful, you need a quality product. Similarly, if you want customers to know about your great product, you need an awesome marketing plan. For investment decision makers, it is key to strike a balance and play on each department’s strengths and value adds to achieve desired success.