Marketing Expert's Corner

This article written in 2009
 

Today's Haiku

What if the biggest 
"Marketing Problems" were not 
Marketing Problems?

As a consultant, I'm brought in to troubleshoot and fix marketing formulas that aren't working.  Products that aren't selling the way they were expected toSegmentation that has decreased yield, rather than increased it.  Messages that have fallen flat.  Lead generation that generated only leads...not new business. 

Sometimes, it's just a bad hire.  Or erratic execution. Or
flaky SFA system.  We'll look at that kind of tactical issue next month.  This month, it's all about the big picture.

Idiot Marketing, Part I:  Strategy

The trickiest marketing situations are where it doesn't matter if you execute better, or advertise more, or push harder.  Where you're just doing the wrong thing...or as shown on the cover of Merrill Chapman's fun book, you're simply on the wrong track.  Looking the wrong way.

Chapter 4 of Geoffrey Moore's The Gorilla Game makes an argument about the importance of strategy over execution that is stunning in its elegance.  Stock valuation in high tech has more to do with market power than it does with execution per se.  Extending his argument into product strategy, it's more important to have a good product in a hot category than to have the hottest product in a so-so category.  As Sun Microsystems so poignantly proved after the dot-com bubble, it didn't matter that they had the world's best 128-CPU, 20-cores-per-CPU server.  Even if their product execution were perfect and they won every potential customer on the planet, it wouldn't mean profitable growth. 

OK, I hear you say, "Strategy is important.  Duh."  What's more interesting is the question, "under what conditions do management teams ignore strategy, or miss the signs that they're in strategic trouble?"

It's not Dunder headedness:  most of the time, management is intelligent, analytical, and well informed.  They're working hard to win.  In these situations, there's induced blindness about the purpose or viability of the company.  Typically, it starts at the top of the organization due to issues such as:

  • Investors will not (often cannot) question whether there is sufficient real demand because they have already made that decision.  Their investment has staked their (and their firm's) credibility on the notion that the company has sufficient addressable market.  It is very tough for them to call this question again until it's time for the next round of funding... or it's time to replace the CEO.
  • Executives (particularly Sales and the CEO) will not publicly question their company's market size or commercial strategy, for reasons analogous to the investors'.  In taking the job, they have committed themselves to succeeding with the cards they have been dealt, often with a pre-defined sales or market strategy.  Further, they know that open discussion of the company's viability is incredibly demoralizing to the troops -- it can be very destructive to the company's value. 
  • Managers who have tied their career to a particular product or strategy will be naturally defensive about the "correctness" of what they are doing.  This goes double for leaders who have been given a substantial bonus contingent upon achieving a narrowly-defined goal (along the lines of "ship this product" rather than "ship a product that will win").  You won't believe what people will do -- and how sure they'll be about their decisions -- for a $1M bonus.  Just ask the guys at AIG's Financial Products Group about this.
  • Everybodytends to avoid looking for problems when things are going great. Nobody wants to mess with success.  Ironically, companies tend to go blind at the very time when they actually have the resources to take corrective action.

 The Blunders

What are the marketing strategy mistakes most frequently made?  Usually, the most dangerous ones are unquestioned assumptions. I hope I'm not an authority on this, but here are some solid candidates (with some preposterous examples):

  • There are customers who have the need and are able to pay
    (I once had to market a product whose only customers would be professors and students of applied math.  The theory was that they were dissatisfied withMathematica and open source equivalents.  We sold 4 copies.)
  • We can identify and sell to customers economically
    ("Our service is for reclusive millionaires in 40 countries.")
  • We can figure out how to monetize this stuff later
    (You are a commercial open-source vendor.  While early in a company's life it's perfectly normal to not know which business model will work, it is not OK to delay experimentation with pricing models, channel and partner structures, and sales operations.  Keep the experiments fast and cheap.)
  • Our company is the right size and maturity for prospects who'll buy this product
    (You're a 5-person company making gas turbines: will Airbus or Boeing really buy from you?)
  • The market is still in play:  the winner-take-all-game isn't over
    (You make a RDBMS that's incompatible with ORCL/MSFT/IBM:  why would anyone buy?)
  • The company is trying to change the game, but an 800-lb gorilla or two totally control the market conversation
    (We think we can change the rules is the OS business or the videogame marketplace.)
  • Our company doesn't really need to know who the customer is, how they choose, or what their behavior patterns are
    (Imagine you work for the online advertising department of a newspaper...wonder why all the ad volume is drying up?)
  • Customers will appreciate the tradeoffs we've made across design, performance, features, price, quality and value
    (Think Ford's Edsel or Sony's Networked Walkman or IBM's OS/2 or any of PC Magazine's "10 worst products of the year.")
  • We don't need to worry about the channel  -- our sales model will work  
    (Imagine you're a young company with an unproven market...and to break it open, you hire a bunch of direct sales reps.  At the other extreme, imagine trying to sell boutique "high-touch" luxury goods over ecommerce.)
  • What we sell is a product for end-users 
    (A laser projector light engine isn't a product for end users; it's one of several alternative technologies for making the product they do buy: computer displays.)
  • What we sell is a product for end-users, the sequel
    (The customer thinks of your product only as a feature of a bigger product, or an attribute of a service.)
  • We're going to do a turn-around instead of a merger 
    (Think Sun in 2003.  And 2004.  And 2005...)
  • We don't have to worry about the competition for now
    (We're the world's leader in 128 bit computers!  [Note the twin dangers here:  either there aren't competitors because there isn't a market, or competitors aren't the issue,substitutes are])
  • We know how to make it, so we'll know how to sell it
    ("We make the best Frabnitz engine the world has ever seen!  Who needs customer domain expertise and vertical market knowledge?")
  • The market is ready to hear our message
    (You're selling mortgage-broker software or financial engines for creating CDOs.)
  • The market trusts us, so they'll understand us
    ("We're GM!  Everybody knows what we stand for.")

The Solutions

The good news here is that every company sometimes falls into these self-deceptions.  That means you aren't alone...and it also means there are ways to get out of the problem.

The first step is to look for the ultimate symptom of strategic snow-blindness:  are you headed for third place in a two-horse race?  Is there a real chance that you're only going to be "in the pack?"  Being an also-ran is rarely profitable, and never gets you a good valuation.

The next step is to narrow things down using strategic questions based on areas discussed above.  Talk to:

  • Current customers
  • Prospects who turned you down, or customers who left you
  • Tech Reporters
  • Industry analysts
  • Partners (particularly those that are having trouble selling your products)
  • Suppliers (particularly ones that work with your top competitors)

Probe most deeply where things aren't comfortable, where outsiders:

  • are unsure about your future
  • aren't motivated by your product directions
  • misunderstand your messages, or
  • don't consider your product or marketing very relevant

You'll get a raft of input, but you must distill the feedback to one or maybe two strategic issues (you can't work on more than that at any one time).  Develop a clear set of goals and milestones for fixing the issues, taking into account your constraints and position in the market ecosystem.  Rinse, lather, repeat...you'll want to do a strategic checkup at least once a year.

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