Marketing Expert's Corner

This article written in 2006
 

There is one thing more powerful than 
all the armies of the world, and that is an idea whose time has come.
     -- Victor Hugo

Nothing is more tragic than a 
product that is ahead of its time.
    -- Somebody Brilliant™

The Studebaker Avanti, designed in 1961, was a car whose design and characteristics made it literally 10 or even 20 years ahead of its time.  Everybody knew it.  It wasn't just the aerodynamic styling:  it was small, fast, and powerful -- reaching 170 mph in test runs.  It had safety features like seat belts, roll-bar protection, door safety latches, and dual side-view mirrors that virtually no other American car offered.  And it didn't sell -- staying in mass production for only 18 months.  They made a car that was too good for the American market.  Avanti is what happens when your market timing is off.

For '61 and a dozen years thereafter, the rest of Detroit pumped out garbage that the market was ready for, and it sold very well indeed.  Meanwhile the Germans and the Japanese began their automotive invasion.

Market Timing

Sometimes it's just luck:  you have the product or service that becomes available just as the market starts to really feel the need.  To bring luck into focus, check out The Tipping PointBlinkand The Anatomy of BuzzThere's nothing wrong with luck.  

But let's look at what you can do systematically to gauge what your market timing is, and how to optimize what you're doing so you don't depend on luck alone.

In High Tech, We're Usually Early

You don't have to read The Innovator's Dilemma to know that high tech vendors thrive on moving faster than the customer.  So in most areas of high tech, you strive to be early.  This is where your profitability will come from, so you want to excel at rapid innovation.

But as we saw in constraint-based managementmarket demand is the ultimate constraint.  So it's important not to be too far ahead of the market.  

  • If you're way way ahead of the market, there isn't really a market yet.  Markets exist only when there are customers and there is some pattern to their buying.  Before a market exists, you can only find a couple of customers and it may be hard to get funding -- even from VCs who are used to dealing with nascent demand.

  • When you're just "way ahead of the market," there are some early adopters to sell to.  But you can't rely on them to help you with product requirements or other tradeoffs.  The customer doesn't know what they need and they don't really know how they'll use it.  They can't tell you how much they're willing to pay.  So, you'd better have an incredibly clear vision, and be willing to tweak the product several times and bombard the market with market-education messages for a long time.  The most consistent exemplar companies for this situation are 3M, Sony and Apple:  

    • In the late 50's Sylvania invented the transistorized portable TV.  Way way ahead of its time, didn't sell.  Years later, Sony started to sell their portable transistor TV and popularized it with years of advertising and product placements in Playboy magazine and James Bond movies.

    • In 1972-6, there was no such thing as a Walkman or a Boom Box or a home VCR:  Sony essentially invented them, and had to convince the world they'd be useful through lots of advertising and press and product placements in Playboy and Esquire magazines.  

    • In 1982, when all computers were character based, Apple created the GUI-based Lisa.  It took the cost-reduced Macintosh and tons of PR and advertising to make that product concept a hit.

  • When you're just a little bit ahead of the market, the challenge isn't advertising or PR, it's the product.  You have to be really precise with product definition -- including the packaging and entire "OOBE" (out-of-box experience).  The customer won't have hard-and-fast preferences yet, but they are pretty clear how they'd use the product.  They can make choices and help you make tradeoffs that improve the product.  Being a little ahead of the market works great with "next generation" products that improve upon an existing, understood category.  A great example of this was IOmega circa 1994.  IOmega designed the original ZIP drive around an enigma:  PCs were getting 200+ MB drives (imagine!), but the common backup devices were still 1.44 MB floppy disks and clumsy tapes.  By focusing relentlessly on solving just this enigma, they made IOmega's business for years to come.   Another great example of this situation was SalesForce.com circa 2000.  Their competitors were either underpowered (Act and Goldmine) or overblown (Seibel), and SalesForce focused on providing a powerful, distributed solution that was very easy to use and grow into.  They continue to lead by having the industry's best compromise of features, OOBE, quality, and price.

  • When you're "right in time" with the market, you have a marketing challenge even if you're ahead of the competition.  The competitors will be doing everything they can to freeze the market, throw mud at new approaches, and use FUD (fear, uncertainty, and doubt) against new vendors.  This is the food-fight that most startups find themselves in.  The following tactics are almost always needed:

    • Thought leadership:  find an industry guru and use them to educate the market about best practices that just happen to involve your product.

    • Lots of PR:  press releases are important, but contributed articles and good old publicity stunts can work wonders for your visibility and market opinion.  If you can, become the center of an industry debate or smoldering controversy that can keep your name in front of readers over months.

    • Competitive comparisons:  produce feature checklists, benchmarks, value comparisons, ROI calculators, and other ways to compare and contrast your product against the other offerings.

    • Leverage on-line communities, blogs, forums, user groups, and other internet linkages to your prospect/customer base.  Vendors who Communicate better with prospects -- and helping customers communicate among themselves -- have a real advantage.  You don't have to be open source to take advantage of these community tricks.

    • Reference marketing:  race to get at least three references or testimonials from customers.  If you're selling internationally, a reference is really effective only in the country or language domain of the customer.

    • If you're doing software, surf an existing open source project to educate the market.  If there's a popular open source project related to your product domain, make your product compatible with its
      APIs / file formats / protocols and befriend that community.  

What if you're late?

Under normal circumstances, the only way you can get away way with being late is if you are a major player in the market and your customer base is willing to wait a bit for your "better" product.  In these situations, you've managed to freeze the market or fight the new product offerings with big ad campaigns, heavy discounting, and cross-promotion (including partners, if you can).

However, if the early market entrants are having problems you have an even better strategy:  dramatically improving on their mistakes.  This is where the "second-mover advantage" comes into play:  you can avoid all the issues the early guys had, and show yourself (and your customers) to be "dumb like a fox."   If you're the 800-lb gorilla, you can also pile on FUD about the small companies' viability, commitment to quality, and preserving customer investments.

Succeeding at this requires some very well crafted tactics:

  • Benchmarks showing how much better / cheaper / faster you are than the first- generation products.

  • Getting industry analysts on your side, advocating your new approach or architecture as the "only way to avoid known problems."

  • Rapidly securing big customer references, to reinforce your credibility.  If you can find some negative references about the other guys (or other well-publicized failures of the competitors' products), pound the market with this information.  Note:  negative references require very careful handling and may be illegal in European markets.  Don't do this without legal and PR advice!

  • You'll probably need some sort of business model advantage to supplement your product advantages.  If you offer something that's only 50% better, it's hard to build a lasting competitive advantage.  If you're the 80o-lb gorilla, your credibility is in itself a business model advantage.  In addition, having a bigger dealer and support network, or a wider range of partners, can lead to an unassailable position even if your products aren't wildly superior.

  • Use cross promotion and your channel power to keep your product in front of the customers' eyes.  As the larger, more established vendor, you can fight and win this promotional war of attrition.

Ironically, some of the biggest successes in nearly any product category come from companies that adapt and copy well -- letting others do all the risky innovation.  In most product and service categories, it's quite rare that the pioneering company survives as a leader.  So it isn't necessarily better to be the first one out there -- it's a perfectly good (and reliable) strategy to be the established vendor that popularizes and commoditizes the "next big thing."

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