The challenge of marketing in new ventures

In a start up, one of the major challenges is marketing. A study by Hills in 1984 showed that a professional analysis of the target market can reduce venture failure rates by up to 60%. Then, eight years later, in 1992, Hills/LaForge conducted a study showing that venture capitalists rate the overall importance of marketing for the success of new firms at 6.7 on a scale of 7, a rating that is higher than all other business functions.

So marketing is an important challenge when starting a company. Gruber did a literature study back in 2004 and came up with this table for marketing challenges, based on three dimensions or "characteristics" as he describes it. Now my question is, when and how can social media help a young company facing the challenges of marketing? A second question I believe to be important here is when social media can be a disturbance? As I've mentioned earlier in this blog, it's easy to get lost in the enormous and chaotic world of social media.

CHARACTERISTICS	CHALLENGES FOR MARKETING IN NEW VENTURES
Newness of the firm	• unknown entity to potential customers and other parties • lack of trust in the abilities and offerings of the new firm • reliance on social interactions among strangers • lack of exchange relationships • lack of internal structures, processes routines in marketing • lack of experience in marketing • lack of historical data
Small size of the firm	• very limited financial resources available for marketing • few human resources • lack of critical skills in marketing • limited market presence • limited market power, disadvantage in negotiations
Uncertainty and turbulence	• very low predictability of market and other data • only limited information available for marketing planning and for marketing decisions • best practices in marketing have yet to be determined for the specific industry • dominant design of an offering is unknown • competitive structure of the industry is changing, relationships with suppliers, distributors etc. are unstable • high risk of wrong decisions, which may have fatal consequences for small firm with limited resources