Introduction to

Management in IT
Lecture 4

Sales
Marketing

Tomasz Bogucki
The engineer perspective

AI-as-a-
Service
The manager perspective

Sales
AI-as-a-
Service

Marketing
Means to generate  COSTS<SALES
Underestimating sales
• Before any sale there must be a need, opportunity, problem to solve
• Look back at the presentation on building and verifying business concepts
Before taking a common path to failure, such as:
• Using rapid design tools, frameworks, open-source libraries, integrating external
services … – today it is so easy to build complex solutions. Let’s build it and see
what happens next!
• It is more exciting to engage into cutting-edge new technologies then to
immerse into business requirements and people problems! People will love this
technology.
• It is more comfortable to design without thinking of customers and markets,
their requirements and limitations. We simply can’t go wrong!
• Let’s build a product/service everyone will want to use. Or at least as little as
0,001% of the world’s population!
Selling

Eternal
Youth serrum

• Unless your product is one of the above, selling will require effort
• Active sales – find customers, contact them and convince them to buy
• Passive sales – sell to customers who found your product/service
• Selling costs! Selling takes time! Return is not immediate.

Sales model
• Answers: how will you sell
• The business model, and particularly the
sales model is equally important as the
product/service itself
• Innovative sales models can be the key
differentiator, create advantage, be a
valuable asset, even be patented
• Sales models evolve
• Startups - frequent monetization question
• Fast growth but no revenue
Revenue model examples:
•
• License
• Software-as-a-Service
• Freemium app + in-app purchases (like
games with “pay-to-win” concept)
• Bronze / silver / gold subscriptions
(Deezer, Revolut)
• Free test period / attempt to lock-in
customer (MS Office 360)
• Success fee / commission (eBay, AirBnB)
• Selling advertising (YouTube, Facebook)
• Sales channels examples:
• Direct sales
• Internet
• Partners network
• Building communities
 (B2C) (B2B)
The sales funnel
Bringing attention Leads /
of potential prospects
Acquisition customers, test and
freemium offers
Some % of these
Effort
Results
X Conversion potential customers
will choose paid
products/services
Deal pipeline

Customers
Retention Some % of them
will become your
regular customers
Customer acquisition – AIDA model

Attention (Awareness)

Interest

Desire

Action
Target customer: B2C vs. B2B (on average)
B2C (business to customer)
• More customers >1000
• Lower prices <200zł often free
• Passive sales (customers come)
• Product needs to deliver result
• Individual decisions, by impulse
• Quick purchase
• Little post-purchase help
• Difficult to retain
Multi-sided, eg. marketplaces (like booking.com)
B2B (business to business)
• Less customers <100
• Higher prices >2000zł and much more
• Active sales (need to seek customers)
• Team needs to show professionalism
• Collective decisions, deep analysis
• Purchase process can take months
• Need to provide maintenance services
• Possible to build longtime loyalty
Using personas
• A ‘persona’ is a fictional, archetype
character
• Represents a person that might likely
use your product/service
• Describes: age, gender, education,
earnings, family status, location, etc.
• Attributes: goals, desires, limitations
• Says why and how will he use the
product
• If needed - more than one persona can
be defined
• Helps think of user needs and better
address them
AIDA.OR storyboard

by Alex Cowan
Marketing mix – 4P

4P
1. Product
• Defining features, that are most valued by customers
• Suggesting future product improvements
• Developing service aimed at customer satisfaction Product
• A/B testing Price
2. Price Place
• Calculating prices to achieve planned sales and profits
• Analyzing market conditions Promotion
• Introducing price discounts (eg. volume discounts)

3. Place (distribution)
• Finding the optimal way to carry sales and delivery (stores, partners, internet, direct …)

4. Promotion
Promotion
• Making the market know you
• Product/service promotion
• Brand awareness
• Education

• Making customers return

• Maintaining relationship
• Informing about new products and offers

• Building brand value 

• Increase sales (passive)
• Help proactive sales
$0.75/kg $1.10/kg $12.00/kg
 Promotion techniques
• Webpage • Packaging Free test periods
Lean (“growth hacking”)

Classic

Price
• SEO
• Advertisement – internet • Discount offers
• Landing pages
• Advertisement – paper • Dedicated offers
• Brochures (print/pdf) media, TV, outdoor
• Public relations (PR) • Events (as host) • Bundles

• Social media, newsletters • Sponsorship (target reach)

• Blogs/forums/content mktg
• Events (as speaker)
• Barter and cross-promotion
• Referral rewards
• Viral
• Leaflets • …discover sth new?
• Promotional gadgets Promotion enables higher
• Engaging celebrities sales and higher margins,
but generates costs 
• Influencers analyze campaign results
(ROI) and balance spending
with return
Place – in the digital age
• Less complicated than marketing physical products (stores, middlemen, logistics…)
• Standards prevail:
• Website / SaaS / download
• App stores
• Steam (games)

• Local or global?
• What makes a difference is positioning / visibility
• SEO (search engine optimization)
• PPC (pay=per-click ads)
The equivalent of having a shop on the main street
 Product/service price components
Pricing factors
• Costs Taxes

• Value for customers

*Profit*
• Competition (direct, substitute) margin
• Rules of supply and demand

Variable
• Profit is a result of adding value costs
(depend on
• Similar businesses will tend to bring similar return volume)

• Being different is creating a business advantage

• Escape competition limitations Fixed
• Adds value costs

• Adding value comes not only from performing work

Product value / differentiators
• Why would customers choose your product/service?
$$$ $

• Lower price • Local presence / location

• More features • Known names / subject gurus
• Better quality • Cool brand / marketing offensive
• Faster delivery • Better sales service / customer experience
• Less environment impact • Reference list / customer satisfaction
• … “The one who follows the crowd
will usually go no further than the
• What disadvantages does your product/service have? crowd. Those who walk alone are
• Compromises and how they affect your target group likely to find themselves in places
no one has ever been before.”
 Developing business advantage
• Limiting supply • Increasing demand • Quality • Innovation
• Unique location • Promotion • Better making • Unique features
• Concessions • New markets • Better service (CX) • Unique sales model
• Certification • Decreasing price • Quick delivery • New technology
• Patents • High brand value • New market
• Concentration, • Complementary offer
• Low price
market control
• Low costs of labour
• Low costs of materials
• Optimized business model
Competition
• The more successful is your company, the more attention
it will get from competitors and imitators
• You cannot stop to improve
• Competitors are a great source of know-how, experience
and inspiration, and warnings

• Defense tactics:
• Patents • Customer loyalty
• Securing know-how • Customer lock-in
• Information, design • Exclusive contracts
• Source code
• Barriers to market entry
• Hardware
• Non-disclosure agreements
Competition - Porter's five forces analysis
Not having a business advantage:

The ‘microenvironment’ of the

company forces earnings to fall
down – to the level of ‘normal
profit’.

‘Normal profit’ is an average profit

that business owners consider
necessary to make running the
business in a particular market
worth their time.

Value is spread among the chain

of suppliers. Their strength
determines in what proportions.
Scalability
• Ability to grow without being limited
• Examples of limiting factors:
• Resources (money, materials, human resources)
• Technical limitations
• Market size
• Law regulations

• Easy scalability means increasing production/service capacity:

• At low costs and effort
• With little time
• In a repeatable manner

• Examples:
• Selling a mobile app is highly scalable, especially if there is no server component
• Contracting software engineering services is little scalable – requires people
Passive vs. active sales
Passive sales (customer come) Active sales (need to find them) Mix
Relate on marketing to attract
• • Relate on person-to-person • In various
attention and invoke action (AIDA) relations
proportions
• Technology aided • People dependent
• Measure
• Aim at mass market customers • Aim at individually selected effectiveness
customers
•Work well with simple to
understand, easy to onboard • Required with complex, tailored
products/services solutions
• Must for low value sales • Need higher unit sales value to
make them profitable
• High marketing costs should spread
among many customers even with • High unit sales costs require
low conversion rate. Acceptable CAC effective turning leads into
(customer acquisition cost) customers
Sale activities
• Active selling:
• Cold calls and e-mails (to selected, potential customers)
• Networking
• Partnerships (outsourcing sales)

• For a sale, there must be a need

• Don’t sell a product, sell a solution
• Add expertise, give know-how
• Once you have attention, it is a lead/prospect – pursue offering, close the deal
• Try up-selling and cross-selling
• Make the purchase process as easy as possible
• Return to former customers periodically
Sales techniques in IT
• Revenue sources:
• Fixed price / time and material (T&M) / agile contracts
• Subscription fees
• Support and maintenance (with SLA)
• Customization, integration, complementary services
• Repeating sales:
• Up-selling: additional modules / in-app purchases
• New versions – new features, discontinuing support for old
• Hardware/OS forced upgrades
• Incentives:
• Vaporware, slideware
• User eXperience (UX)
• Freemium/premium or free test periods
• Easy access/activation: on-line download, SaaS
• Technology, service and data lock-in – making it difficult to leave
Retention, customer care
• Know your customers – benefits:
• Feedback - confirmation of your strategy and operations
• Ultimate input for product/service development
• Information on current market state, trends, competitors
• Easy approach for further sales
• Good relations generate more business
• Communication, maintaining relations
• Respect: the customer is the one who pays your salary
• Retention – cost of winning a new customer is much higher then preserving current
• Happy customers make the best salesforce
• Recommendations, reference lists, reference letters, reference visits
• Speakers at events, brand ambassadors, influencers and evangelist marketing
• Customer care costs (staff, time, events, freebies …)
 Why sometimes business is
Building company value not all about making a profit…

• Investors look for startups, which:

• Have a devoted, clever team
• Are easy to scale
• Can go global
• Can defend from imitators (secured know-how, patents)
• Can earn on subscriptions (recurring payments)
• Have some traction (market verification)
• Are exciting

• Companies can build value even being non-profitable by:

• Developing intellectual property (IP)
• Building a large customer base
• Creating innovative products/services/business models and staying ahead of competition
• Selling dreams and building brand value using marketing techniques