Branding for a Startup: When to Start Worrying

A startup is an organisation that is in the process of searching for an effective business model, whereas companies are organisations that already have one. It is precisely this search process that forms a startup's main distinguishing feature: within a short period of time, the company may change the product itself and its USP, as well as its target audience, emotional benefits and communication channels. 9 out of 10 startups fail, and one of the key reasons is growth driven by searching for and testing hypotheses, which brings chaos into a company's operations. Sound marketing and brand strategies help to streamline the work.

 Building a marketing strategy is especially important for a startup: here the track for launching and testing “product-market” fit is relatively short. In total, 56% of startup companies “fail” because of mistakes in their marketing strategy; surprisingly, only 16% of closures are due to finances.

Over the past year, the situation regarding startup marketing in Russia has improved significantly: COVID-19 became a driver of greater digital literacy among the population (and most of our startups are digital), so founders began promoting themselves to a wide audience at earlier stages. Thus, in 2020 only 4% of “startuppers” identified the “Marketing and PR” category as deserving a high level of attention. By the end of 2021 the figure had risen to 7%.

 Logically, entering the market requires a comprehensive marketing strategy that covers both pricing and the product's promotion channels. But besides marketing, branding must not be forgotten. Branding is the sum of the efforts to create a brand and bring it to market: that is, a comprehensive study of the market and the search for an unoccupied niche, consumer research and finding the “keys” to them, and the development of an image that reflects the value of the product. Startups often notice the importance of branding too late.

 Let us look at the startup life cycle model. At the Pre-Seed stage, companies usually do not invest in branding - this is due to the absence of a clear product offering. At the Seed stage, digital marketing comes into play, but the effort here is concentrated on lead generation - 91.7% - rather than on brand awareness - just 8.3%. Only by the Series A stage do startups get round to working on brand positioning (20%) and pay more attention to awareness (16.7%). In other words, the driver of full-fledged brand development is market entry and the organisation of serial production.

 This is where the main mistake of startups lies: full-fledged work on a new product's brand should begin as early as the MVP (minimum viable product) development stage. Bringing a viable product to market involves real interaction with the target audience: according to E. Rogers' model of the diffusion of innovations, the first users are “innovators”. They have the lowest level of product loyalty and switch quickly between new products, yet it is precisely the “innovators” who ensure a product's rapid spread. That is, the “distance” between them and the “early adopters” - the next category of consumers - is small.

And while “innovators” are not very receptive to brand image, “early adopters” need brand awareness. How will a consumer distinguish “that very” product from the rest? A strong brand will create unique emotional benefits for the consumer and anchor the value proposition in their mind,