How Poor Marketing Affects Small to Medium-Sized Businesses (SMBs)

Business Failures Due to Poor Marketing

Results of Poor Marketing for Startups

Research based on analysis of hundreds of startup "post-mortems" from CB Insights identified poor or insufficient marketing as a significant, though not leading, cause of failure. 

• 14% of startups fail due to poor marketing, according to CB Insights.

Other, more frequent marketing-related failures for startups include:

• No market need (42%): This is the top reason for startup failure and is directly tied to poor market research which is a foundational part of marketing

• Being outcompeted (19%): Inadequate marketing often allows better-positioned or more visible competitors to win.

• Ignoring customers (14%): Failing to listen to customer feedback and adapt products is a failure of marketing and product development.

• Not having a strong online presence: Other analyses indicate that the lack of an online presence significantly increases failure risk for small businesses. 

Results of Poor Marketing for Mature Businesses

Failure rates for mature businesses often trace back to a failure to adapt to changing markets, where poor marketing plays a critical but less direct role than for startups. 

• Failure to innovate and adapt: Established companies can become complacent and "married" to their original business idea. A failure to innovate and market new offerings in a changing world leads to loss of market share.

• Declining sales and relevance: Mature companies like RadioShack and Borders failed because they did not adapt their marketing and products to a new landscape dominated by e-commerce and smartphones. Their brand became irrelevant to a new generation of consumers.

• Misunderstanding customer demand: Even experienced companies make marketing missteps, like McDonald's did with its Arch Deluxe and McLean Deluxe burgers. These failures were due to a misread of market demand and not taking enough time for research.