Excerpt from "The Edge of Zero", Chapter 4 - What Is High Tech Marketing?

 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.