Author's Note: Marketing is the most poorly practiced and least understood profession in High Tech. The essay below is one of several chapters in "The Edge of Zero" which explores Technology Marketing in all its facets. As an excerpt, the reader may notice some lack of continuity due to references within the text that refer to earlier or later chapters. Nevertheless, the chapter does stand reasonably well enough on its own and marketers as well as non-marketers will likely find the editorial of interest.
I am also doing a great deal of research on new technologies on the horizon that I think many of you will find exciting - Machine Vision, AI, Voice Actuation, Graphene and others. If you have particular interest in these or other topics, please let me know in the comments, as it will influence the order in which I publish the new material.
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Source: musashi-miyamoto.com
Perception is
strong and sight weak. In strategy it is important to see distant things as if
they were close and to take a distanced view of close things. ― Miyamoto Musashi
Before elaborating on the new
Marketing Canon for High Tech in Lean Times, we need to start from a common
understanding of what Marketing really is. The High Tech sector has never
really had to learn how to perform Marketing properly and thoroughly because
the end user market appetite for Technology has been heretofore insatiable. Yet
the lessons will very soon come due, as history amply illustrates in a previous
technology revolution from a full century past.
Case Study: The Model T
Henry Ford experienced the same
phenomenon of seemingly unlimited, nondiscriminatory demand when the nascent
automobile market proved so hungry for the new transportation tech that it
didn’t matter if the only thing available at the right price was a black Model
T. This situation lasted from 1908 to
1929, when Ford shipped its 15 Millionth unit of this iconic automobile.
Source: ophelia.sdsu.edu
But all good things come to an end,
and the Ford Motor Company was caught flatfooted at the worst possible time –
on the eve of the Great Depression. General Motors began to overtake Ford with
new models, available in a range of colors and styles for a more discerning and
frugal customer base. While Ford clung to its operations-driven approach of
cost-efficient mass production and floundered during the 1930’s, GM continued
to grow and remain profitable during an incredibly difficult economic era and
surpassed Ford in 1933, leaving them in the rear view mirror for the last 80
years and counting.
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So where did Ford go wrong? What
were the facets of the business that they did not properly grasp?
In reality, what Ford experienced was not a
single point failure such as a lack of color choices for its products or
meeting the ‘right’ price level. The root cause of Ford’s dethronement from the
pinnacle of the automotive industry was the result of complete inadequacy in
every aspect of Marketing.
The rest of this chapter will
illustrate what knowledge, methods and practices the profession of Marketing
encompasses in its totality. Along the way, it will become transparently
evident how Ford’s lack of understanding of what Marketing is all about
directly led to their undoing.
Bricks & Mortar
The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand. - Sun Tzu
The classic definition of Marketing
essentials is known as the “4 P’s” – Price, Product, Promotion and Place. Marketing textbooks from the 50’s to the 80’s
always identified these factors as the fundamental ingredients of effective
Marketing.
For purposes of clarity, the 4 P’s
can be broadly defined as follows:
Price – formulated thru the convolution
of a firm’s desired return/margins, an estimate/SWAG of what the target market
can effectively bear, an empirical measure of the relative desirability of the
product or service versus competitive offerings, and the estimate of the
customer cost point believed by the company to encompass the share of the
market they wish to own or the segment which it has targeted.
Product – in High Tech, this could be a
device, system, component, module, software package or ‘widget’ of some kind, a
service or bundle of services, and frequently both. The term should be
interpreted broadly as the combined capabilities the company presents to the
marketplace as offerings for which it charges a Price.
Promotion – a term which broadly captures
the methods and techniques used to incentivize customers to engage with a
company and purchase its offerings. The methods and instruments used vary per
industry, and can include advertisements and commercials thru various media,
coupons, calendar sales events and other price discounts, as well as the
attractive packaging and dissemination of information in various forms
concerning the features and benefits of the company’s offerings.
Place – this refers to the location where
the customer can most readily purchase the offer for sale, whether it be thru a
reseller, distributor, or directly from the company. This can also be referred
to as “Channel.”
But just maximizing the “4 P’s” for
a given business enterprise does not automatically result in productive and
successful Marketing. One
can see Ford’s failure written large right here.
Ford was supremely confident
that it had the 4 P’s covered. The entire enterprise was organized around
maximizing economies of scale thru mass production to achieve an affordable
Price, with a high quality and easy to maintain Product, a clear and consistent
Promotion focus thru the 1910’s and 1920’s on price and product leadership for
the middle class consumer, and a convenient Place for customers to acquire the
product thru a nationwide distribution system of franchised dealers – a concept
invented by Ford. Yet it all fell to pieces precisely during economic
conditions where conventional wisdom proclaimed any competitor would have found
it the most difficult period imaginable to mount an effective and ultimately
successful challenge.
Evidently, knowing the 4P’s and applying them to a firm’s
offerings is not enough to ensure success. In the same way that gathering 150lbs of carbon, iron,
calcium, sodium, phosphorus and other natural elements and combining them with
several gallons of water does NOT produce a human being, focusing solely on
the 4 P’s does not spontaneously result
in the successful marketing of the firms’ products and services. In truth, the 4 P’s are merely the building blocks of a
concerted and sustained Marketing effort.
Hammers & Shovels
If the 4 P’s are the bricks and mortar of Marketing, you
still need tools to build anything with them. And there are lots of tools –
advertising campaigns, promotional plans, coupons, editorials, press and
analyst interviews, conference papers, datasheets, product briefs, brochures
and more. There are also channels to use these tools –print publications,
television, radio, trade shows, distribution partners and sales. The digital age has spawned the WWW as a new
channel with worldwide reach, along with a powerful selection of instruments -
websites, Search Engine Optimization/Marketing, embedded video, social media,
webinars, eDocs, eCommerce, pop-up ads, targeted email campaigns and so forth.
There have never been more tools and channels available to a company to fill
its sales funnel, and later chapters in this book are devoted to selecting and
properly using these items.
However: successful marketing does not simply arise from the
energetic development and execution of ads, promotions and campaigns, regardless
of the conventional or digital instruments & channels employed. Marketing
departments often work frantically to vomit forth a voluminous storm of
dazzling promotions, campaigns and events, but rarely with anything but a
transitory effect on the firm’s market standing. These activities are, in the
end, just tactics.
Purpose
Source: flickr
Strategy without
tactics is the slowest route to victory. Tactics without strategy is the noise
before defeat. ― Sun Tzu
A successful marketing effort requires, first and
foremost, a comprehensive Strategy. Developing an effective strategy is a
prerequisite to genuine, sustained effectiveness in Marketing. Not taking the
steps to formulate a Strategy puts the cart before the horse, sending the
company on a long, hard journey without a roadmap to a concrete destination.
A company has to make a market aware of its presence and
what it has to offer, as well as making any buying decision easy to
execute. Careful, detailed planning in
advance regarding the channels for communicating with customers and increasing
their awareness of the firm and its offerings, providing them with the
knowledge to make an informed decision regarding the usefulness and benefits of
its products and services and delivering the means for customers to decide on
purchasing the company’s offerings & adopting them as an integral part of
their own personal, professional and/or business activities is the essence of
strategy. Tactics are merely the ways and means of implementing a thoughtfully
crafted strategy.
There are multiple models used to define and implement
strategies in the business world, including AKA (Awareness-Knowledge-Adoption)
and AIDA (Attention-Interest-Decision-Action, made notoriously famous by Alec
Baldwin’s character in the film “Glengarry Glen Ross.”) Either model or any of
the various derivatives and elaborations, if used properly, are equally
effective at guiding the genesis of a winning strategy. The important thing is
to use tools and tactics in a congruent, complementary manner so that campaigns
are mutually reinforcing and achieve maximized, long-enduring and positive effects.
Before formulating a strategy, however, a company must
have in hand the means of victory.
Victorious warriors
win first and then go to war, while defeated warriors go to war first and then
seek to win. ― Sun Tzu
Stated differently, an enterprise first has to express in
both verbal and written form what it offers the market that none of its
competitors can offer as effectively, if at all. This is the core value
proposition of the firm. The company
must then make the market aware of the advantages it brings to its customers. A
company’s core value proposition serves as the basis for generating the
appropriate messaging and positioning for its products and services to have
maximum effect in the marketplace.
The value proposition is the key. A small company can
seem large in the eyes of the market if its value proposition is so compelling
that it overshadows the firm’s competitors. The messaging and positioning that
flow from the value proposition must be crafted to generate that ‘larger than
life’ image while remaining truthful. For instance, a technology firm that
states it is ‘the leader in XYZ technology ’, even if true, actually harms
itself by using such unimaginative, dispassionate and uninspiring phraseology.
The messaging and positioning must be every bit as extraordinary, memorable and
substantive as the actual value proposition on offer to the market.
A strong value proposition does not focus on just one
particular advantage of the company’s offerings. There is no such thing as a one-dimensional
company, and focusing everything on a single strength always leaves important
competitive leverage on the table.
Case Study: Samsung and the HDTV market
An instructive example is offered by Samsung, the
largest and most globally recognized of the South Korean chaebol. The rise of
Samsung in the HDTV market has been nothing short of meteoric.
Five years ago, Samsung was not a serious contender in
HDTV but was not deterred by this fact. They spent years of effort on
developing internal expertise to create
world class products for this market. The engineering results were spectacular.
The intrinsic superiority of Samsung televisions stemmed from their ability to
produce video with the same or better resolution than their rivals at half the
price.
Yet Samsung did not build positioning and messaging
solely around its enormous price advantage, but around total cost of ownership
– in other words, the total value to consumers of an HDTV every
bit as technologically sophisticated and high quality as anything on offer from
Sony, Toshiba, Phillips or Panasonic, combined with a significantly lower price
tag.
Samsung understood early on that one should not bring to
bear strength against strength, but strength against weakness. They realized
from the start that their competitors had economies of scale in their own
factories that, if not quite at Samsung’s level, were still significant, and
could be remedied over time thru a focused effort. If Samsung had chosen a one-dimensional
strategy as a pure price leader, competitors would have bought themselves time
to improve their cost position by taking the margin hit and lowering prices for
a limited period to ensure that Samsung did not build substantive market share,
while portraying Samsung’s TV’s as cheap electronic junk. Instead, Samsung
aggressively touted their preeminence in HDTV technology thru demonstrably
superior performance and quality along with a profound cost advantage, creating
a devastating one-two punch combination and an unbeatable value proposition.
One can see from this example how a comprehensive
marketing effort can make all the difference. By taking the time to define a
more comprehensive and refined value proposition, Samsung was able to build a
powerful go-to-market strategy, with messaging and positioning built around the
core value of the company’s offerings and reflected in every campaign,
advertisement and promotion the company undertook. Their strategy was so well
crafted that, in effect, Samsung had already won the battle before taking to
the field.
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Audaces Fortuna Iuvat
Truly paramount marketing plans are not
intended to be passive instruments. An often overlooked benefit of a skillfully
crafted marketing plan is that a well formulated and comprehensive strategy,
with a compelling value proposition reinforced with appropriate positioning
& messaging and executed thru an array of tactical campaign plans, provides
a business with perhaps the most important factor for success – the role of the
Aggressor.
I don't want to get any
messages saying, "I am holding my position." We are not holding a
Goddamned thing. Let the Germans do that. We are advancing constantly and we
are not interested in holding onto anything, except the enemy's balls. We are
going to twist his balls and kick the living shit out of him all of the time.
Our basic plan of operation is to advance and to keep on advancing regardless
of whether we have to go over, under, or through the enemy. We are going to go
through him like crap through a goose; like shit through a tin horn! – George S.
Patton
Case Study: 40 second Boyd
As the Aggressor, you gain the distinct advantage of
forcing your competitors to react to you.
The US Air Force captured this principle brilliantly in a formulation
that serves as the guiding paradigm for their fighter pilot training – the OODA
loop.
Sources: flightfest.ie
Developed in detail by maverick pilot John Boyd, the
OODA loop breaks down human behavior under stress into a recognizable and
exploitable pattern – Observation, Orientation, Decision and Action. A pilot in
combat will observe his surroundings, orient himself to the immediate threats
and opportunities gathered from his observation, decide on an appropriate
response, and finally take action.
Despite limited combat experience, Boyd’s intimate knowledge
of aerodynamics and aircraft design gave him such insight into the operational
limits of fighter aircraft that, as an instructor at Nellis Air Force base –
site of the famed Fighter Weapons School, or “Top Gun” – he issued an open
challenge to all Air Force, Navy and Marine pilots wherein he would allow them
to position themselves immediately to his rear in a ‘confirmed kill’ position
and, once given the ‘go’ signal from his pursuer, promised that within 40
seconds he would reverse the situation.
Despite being confronted by dozens of veteran pilots and aces from WW2
and the Korean war, he never lost an engagement.
In battle, if you
make your opponent flinch, you have already won. ― Miyamoto Musashi
The technique Boyd used was to take actions that would
present his opponent with a limited set of responses. By anticipating and
planning for those responses, Boyd continually outguessed his opponents,
staying ahead of their reactions and placing them further and further into a
position of disadvantage. He described this as being ‘inside’ of his opponent’s
OODA loop, which forced the opposing pilot into a defensive posture, reacting
to Boyd’s actions in ways that Boyd could anticipate into order to guide his
opponent to his own defeat.
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By being the Aggressor, a company puts itself into a
position of at least partially dictating terms to its rivals, tilting the field
continually in its own favor. A comprehensive marketing plan builds this into
its strategy and tactics, with periodic reviews conducted
to realign activities based upon competitor choices and reactions to previous
company campaigns, keeping adversaries perpetually off-balance.
More Than The Sum Of Its Parts
One can see how vitally important it is for the long
term success of an enterprise to develop a complete Marketing plan. This is not
simply the isolated, compartmentalized activity of one department in the
company, but invariably touches on and co-involves the entire organization.
There is an actual multiplier effect from an adroitly
formulated Marketing plan. A well articulated plan provides a direction and
sense of purpose around which the entire firm – not just marketing and sales,
but every department in the company – can coalesce. The efforts of internal departments become
mutually reinforcing, further expanding a company’s value proposition over its
rivals. When this value is properly communicated to the market, customers are
drawn to the firm thru their understanding of the advantages that will accrue
to them by doing business with it, and the competition will be left scrambling
to catch up as the company’s business grows and outpaces them.
It is difficult to
realize the true Way just through sword-fencing. Know the smallest things and
the biggest things, the shallowest things and the deepest things. ― Miyamoto Musashi
Thus, you must start from the top. Determine your firm’s
fundamental value proposition(s). From this derives the logical positioning and
messaging. Once these are clear, develop a strategy for using the positioning
and messaging to communicate your value to the market. From the strategy,
individual tactics arise – campaigns, promotions, programs and tools for
implementing them. These tactics drive the 4 P’s as dictated by how their
relative strengths in your value proposition can reinforce your messaging and
positioning.
As abundantly demonstrated by the experience of the Ford
Motor Company, an enterprise cannot implement only parts of this hierarchy. All
must be developed in detail, as individual layers and components relate
organically to the whole, such that this whole becomes larger than the sum of
its parts. And all of this – along with all of the cross-functional and
cross-departmental difficulties and complexities which it implies - is the
domain and responsibility of Marketing.
Taking The Reins
Marketing is, in the end, a LEADERSHIP role. The very
act of initiating a Marketing plan for a company and its products means
identifying the Value propositions which will make a firm’s offerings
compelling to its target market. Thus, the company must either innately possess
such value in its products, or it must begin developing and producing products
that embody the market’s definition of irresistible value.
This means a marketer must be able to simultaneously
grasp the potential of the company’s engineering team, the aptitude of its
operations arm, the expectations, desires and dreams of its customers, and the
capacity of its sales force. When a Marketing plan is formulated correctly, an
enterprise will have the knowledge to develop the kinds of products its
customers will happily buy, which the factory can skillfully build, and the
sales force can readily sell.
Chance will not do
the work—Chance sends the breeze;
But if the pilot slumber at the helm,
The very wind that wafts us towards the port
May dash us on the shelves.—The steersman's part is vigilance,
Blow it or rough or smooth. - Walter Scott
However, as is true of all human activity, Markets are
not static. Competitors, suppliers, and customers evolve and change – sometimes
in fluid, linear and predictable ways, at other times in unsettling, jarring
and improbable directions.
After two decades of success, Ford was unable to
perceive the evolution of its marketplace, and once the change was impossible
to ignore further, their rigid adherence to previously successful guiding
principles had ossified the firm and further compromised its ability to respond
to changing market conditions until it was simply too late, and the battle was
lost to GM.
I returned, and
saw under the sun, that the race is not to the swift, nor the battle to the
strong, neither yet bread to the wise, nor yet riches to men of understanding,
nor yet favour to men of skill; but time and chance happeneth to them all. - Ecclesiastes 9:11
Change is an unavoidable circumstance of existence.
Fighting it, fleeing from it or ignoring it leads to decay, defeat and ruin, as
Ford discovered. Thus, Marketing plans need to be frequently assessed, reviewed
and challenged at all levels and in detail, then as warranted either adjusted
accordingly or scrapped altogether and reformulated to reflect changing
circumstances.
But what kind of person must a Marketer be in order to
do all of this? What mix of talents, skills and traits are necessary, and how
does a skilled, proficient and effective Marketer think, plan and execute? The
next chapter explores this topic in depth.
