People don’t understand the importance of sales and distribution. Marketing is important as it helps people discover products, and advertising is important as it puts ideas in the consumers’ minds. People are suspicious of sales staff because they don’t look like they’re hard working, but a good salesman is like a good actor, it’s hard to see how they work.
Having a strong distribution plan and getting excellent sales and distribution can create a monopoly even if the product isn’t that unique.
Two metrics set the limits for effective distribution. The customer lifetime value (CLV), the total net profit you earn on average over the course of your relationship with the customer must exceed the amount you spent on average to acquire a customer, and the customer acquisition cost (CAC), the more expensive your product is the more time and money you should be willing to spend on each customer.
Marketing and advertising are for low priced products or startups when the numbers aren’t there for other distribution channels. But it is important that you don’t try to compete with bigger companies through advertising. Viral marketing works for inexpensive products. A product is viral if its core functionality can encourage users to invite friends to become users too. PayPal for example went viral when they used to pay people to sign up and invite a friend.
According to Theil, distribution is the hidden bottleneck. At least one distribution channel should work, or the company will fail. You must sell your ideas to investors and employees like you would a customer. You need to develop a public relation strategy and decide how you want to advertise.
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