This is a common issue with ALL software-based start-ups. I've theorized over the years that it has a lot to do with not only being overly impressed with their own idea and some magical force that will cause it to "sell itself", but also because the product can be distributed online, making people think they can skip over a lot of the core steps involved in not only doing marketing, but designing the product in the first place and doing the required ground work for proper Branding and positioning.
I more often than not turn away work from software/app startups for this reason, but leave them with this advice:
Pretend you have to sell your product shrink-wrapped in a box through chain stores like Best Buy and Staples...then what would you do? Take the steps you need to make sure it is "packaged" and targeted correctly...that is what most start-ups omit and where they fail.