Marketing Expert's Corner
This article written in 2007
As I wrote forty issues ago, a confused product strategy can kill reputations and companies. Unfortunately, the "dessert topping / floor wax" problem is only obvious when it's somebody else's. When it's your identity crisis, the most common signs are:
- marketing conversations that go around in circles,
- positioning statements that insiders can relate to, but prospects can't,
- tradeshow booth signs and web site home page that frequently get the reaction, "what is it you do?"
- proposed product categories that try to ignore 800-lb gorillas, and
- long meetings where marketing, sales, and even the CEO seem to be in denial, but what they're in denial of is unclear.
An identity crisis is no more fun in business than it was during your adolescence. Here's how to detect and rectify one in your organization.
Many companies think that their positioning isn't compelling enough because of they don't have enough adjectives about their product or service. In high-tech, companies want to talk about their high-performance, world-class, enterprise caliber, real-time, dynamic web service features. You'll also hear about the "-ilities:" adjectives that describe qualities such as high availability, remote serviceability, and scalability.
These adjectives are checklist items about your feature set -- things someone might want to know if they cared. The problem is, these adjectives aren't things that would inherently motivate people in the first place. Adjectives about your features don't promise a value proposition -- they allude to a differentiator or a competitive advantage. In other words, these adjectives indicate why you should buy one vendor's product over another, but they can't tell you what the results of using either product will be. Tell me again: Why I should care?
The deepest messaging / positioning problems don't come from the adjectives: it's the nouns. When marketing a product or service, the nouns are a statement of what you are (what product category you're in) and point the customer in the direction of the benefits of purchase (value proposition).
The classic noun problem is Lotus Notes. After having used it over a 10 year period, I still don't know what kind of product it is. It's sort of email, sort of a database, sort of a document management system, sort of an application platform. Even the press had trouble with this one, and the only name that seemed to stick was "groupware" -- pretty vague.
Notes developed a server component they call Domino. It's like Exchange except it isn't, and some versions of Domino include document management and an internet server. This mish-mash of product categories makes positioning nearly impossible because nobody knows quite what value it provides, or what to compare Domino to.
The problem here is the category: what your product is and what it does for the user. This ought to be simple, because your engineers probably know what they built. But with new products it's amazing how convoluted product categories get, and how often it's the core of a marketing identity crisis.
The issue gets complicated by politics (particularly from Sales or your VCs) who want a hot ticket now.
Let's say your product is a database engine. VCs aren't very excited about the database market because it's been around a long time, isn't growing much, and contains not-so-healthy vendors. Unless you're doing something really different (for example, you're the first really popular open source database), they're not going to want to hear about pursuing the database market.
But if a database is what you are, you have to do some tap dancing. Look into adjacent areas for categories where you might fit: data warehousing, ROLAP, database accelerators, mobile database, real time database, streaming database -- even though some of these markets are large, the VCs aren't likely to be very positive.
This problem has existed for a long time in the database market, and you can learn from their solution: sub-categorize. Here, you're applying the adjectives to the kind of product, rather than the features. When launching a new database company, you have to find an unsatisfied need which is felt by a market segment. Identify use-cases and personas that really can't use what's already in the market. Even though in databases it all boils down to price/performance and data types, vendors have created a series of sub-category "revolutions" over the decades:
- The mainframe database (IBM)
- The relational database (Ingres)
- The hardware-independent SQL database (Oracle)
- The OLTP relational database (Sybase)
- The easy database (Access)
- The data warehouse database (Red Brick)
- The database for mobility (iAnywhere)
- The database for objects (Versant)
- The database for cyberspace / internet servers (Illustra)
- The XML database (Tamino)
- The free database (MySQL)
New product categories are most frequently asserted by early-stage companies who need to make a name for themselves. Ironically, large companies who have the marketing resources to spend on category creation are less likely to do so, preferring instead to take over categories created by smaller firms.
Don't attempt to create a category or new sub-category when the competition is along well-defined lines and you fit in an established category. Most hardware companies are in this situation, where the customer evaluates products more along lines of price and performance than unique features.
But if you're trying to change the rules of the game and make the features of the established players less relevant, creating a new category is your path. This is the game in most software companies.
Declaring a product category is a statement of what your product is, whom it's relevant to, and what products you should be compared with. Generally speaking, you want to avoid creating a completely new product category because you want to be relevant to as many people as possible. No matter what, it takes time -- several quarters -- to have an impact.
Category creation is tricky because you have to distance yourself from the core of the current vendors (whom you'll be attacking) while keeping close enough to the existing category to avoid having to educate the market from scratch (which is always expensive). You also need to pick the right subcategory -- even though your product can do several things, your statement of identity has to be along the axis that matters. For example, an iTouch is a better MP3 player, not a new kind of PDA -- even though it has several PDA features.
The temptation is to create a category where your product is by definition #1. But think about it: if you're an early stage vendor with few sales, being the overwhelming leader means it's a really small market that probably doesn't matter. Instead, create a special niche within an existing category that allows you to:
claim leadership for customers with sophisticated needs,
show a cost or delivery advantage over existing players,
leverage a new technology or medium that makes the existing products obsolete.
You'll want to convince the press and market influencers that "everyone" will be following your lead over time, as they try to duplicate what you're doing and change the basis of competition in the category.
At the outset, this means that you intentionally are not trying to talk to everybody. The goal is persuade the early adopters, the market mavens you'll remember from Crossing the Chasm and Inside the Tornado. The issue you have to watch for is the reaction of executives who missed this lesson: if you attempt to communicate with everyone, you persuade no one.
In selecting a well defined audience, you're teeing up a conversation about the audience's specific problems and what you do to solve them. You're motivating the audience by showing your relevance to their needs. This conversation is about the core of your value proposition, and it's inextricably linked to the product category you're in. The VCs or Sales Reps may scream "that market's too small, you've got to address a bigger market!" Tough. If you want to win, you have to be compelling -- and that means being coherent about who you are and who needs to listen.
New vendors have to start somewhere, dominate a beach-head customer segment, and grow outward from there as the market pays attention to their message. This is classic "bowling alley" strategy, and winning the game means being consistent about which lane you're playing in.
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