Magazine article Marketing

Bite-Sized Business School: The Strategy Module

Magazine article Marketing

Bite-Sized Business School: The Strategy Module

Article excerpt

When is it better not to adopt an innovative marketing strategy? By Gary Dushnitsky, associate professor of strategy and entrepreneurship, London Business School.

Every entrepreneur has faced this dilemma at some point. How might I speed up my go-to-market strategy? Recently, crowdfunding has been celebrated as a solution to this age-old challenge. But it is not a panacea, argues Tony Fadell, who sold Nest Labs to Google for dollars 3.2bn earlier this year. The founder and chief executive of the company, who was also one of the 'fathers of the iPod' when at Apple, has critical insights into the new entrepreneurial strategy.

It is easy to appreciate the entrepreneurial need for speed. The sooner a start-up places its offerings in the market, the sooner it wins customers, establishes its brand and realises financial gains. However, while undertaking significant investment could speed time to market, it may also prove detrimental as it incurs substantial costs when the demand may simply not be there. This chicken-and-egg problem has been an integral part of every entrepreneur's life. To establish market presence necessitates resource commitment, but such commitment can be prohibitively costly in the absence of market demand.

Enter crowdfunding. Consider the story of Pebble Watch, a customisable electronic wristwatch that connects to smartphones via Bluetooth. To develop the product, its inventors initiated a campaign on Kickstarter, a popular, reward-based, crowdfunding platform. In less than a month, they raised dollars 10.27m, more than 10 times the original target Importantly, the funding came from 68,929 individuals, each eager to see the finished product and secure one.

Crowdfunding can alleviate the entrepreneurial chicken-and-egg problem The argument goes as follows: a successful campaign not only establishes the demand for one's offering, but also secures the funds necessary to develop it, raises awareness, builds word of mouth and enhances reputation. …

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