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Marketing Spin

Zack Urlocker
Thursday, January 24, 2008

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Wacky Packages

Once you've got a technology company up and running it generally consists of two groups. Those who build the product and those who sell the product. So what role does marketing play? They're the ones who talk about building and selling the product. Marketing provides an update to the old saw: "Those who can do, and those who can't make Powerpoint slides."

Marketing in the technology industry first began in 1943 with IBM Chairman Thomas J. Watson Sr's famous market prediction: "I think there is a world market for maybe five computers." The marketing department immediately issued a press release announcing IBM as the worldwide leader in computers implying that they had already sold two units giving them forty percent market share. Unfortunately, sales remained relatively flat since IBM's Marketing team also pre-announced OS/2 by forty-two years.

Nonetheless, IBM's marketing team managed to prove that there was a huge untapped need in the market place. Unfortunately, the need was for market research. Companies like Gartner Group, Yankee Group and others fell about themselves selling IBM's marketing team research reports showing that there was a market for six or even seven computers and offering to write up fancy reports segmenting the market.

The Marketing Perspective

Today, more than ever, Marketing helps a good high-tech company differentiate its strategy and products. After all, someone needs to spend the budget. Consider this exchange at a typical high tech executive staff meeting:

CEO: Our revenues are down 75%, we're running out of cash and the board wants me to cut expenses by moving operations to Latvia. What should we do?

VP of Engineering: We have some new features the guys have been working on. We could ship a new version within 30 days if we had to.

VP of Sales: What if we create a "jumpstart" program for new customers that includes a bundle of hardware, software and training for a fixed price?

VP of Marketing: Latvia? I know a great place there for an offsite!

But it's not all Powerpoint presentations and offsite meetings in Marketing. Brainstorming meetings and press interviews ultimately give way to real work. One of the key areas Marketing is involved in is helping to create sales leads for customers. Ideally, these sales leads should be highly qualified, meaning they pass at least one of the following criteria:

  • Has a budget, or knows someone who has one
  • Is ready to buy something from someone
  • Likes to have sales people buy him or her lunch
  • Has a pulse or knows someone who has one

In order to generate leads, the marketing department would engage in a variety of lead generation activities. This might include items such as:

  • Trade shows ("Comdex: One hundred thousand IT buyers looking for free t-shirts")
  • Seminars ("Learn from industry experts who also happen to be on our company's payroll")
  • Telemarketing campaigns ("You've won a free vacation rental with the purchase of any mainframe computer")
  • Press releases ("SoftBrain announces plan to announce new announcement plan")
  • Product promotions ("Buy now and enter now to win a free llama ride")

4 P's of Marketing

One of the key academics who defined marketing in the 1970s was Philip Kotler, a professor at Northwestern University's Kellogg School of Management ("Now fortified with iron and 5 essential vitamins.") Kotler came up with the original "4 P's of marketing": Product, Price, Promotion and Place. These are best understood with the following typical questions posed by marketeers:

Product: What do you mean we can't do that? It's in the press release!

Price: How much are the others guys charging?

Place: Should we hold the offsite meeting in Hawaii or Aspen?

Promotion: How long does it take to become VP around here anyways?

Over the years, the 4 P's have actually been extended so there are now 5 P's. But depending on who you talk to the 5th P might be "Positioning", "People", "Packaging" or even "Powerpoint". The important thing is you now get 25% more absolutely free.

In addition to helping to identify products and key target markets, the Marketing organization also performs another important function in the industry. It helps ensure that the unemployment rate stays low. If you've got hundreds of thousands of buyers at tradeshows like Comdex and CeBIT, then someone has to come up with all the goofy contests, give aways and promotional hoopla. And your engineering team is certainly too busy to do these things.

Building a Cult Brand

In recent years the rallying cry of many high-tech companies was "build the brand." No one ever really defined what was meant by brand, other than the fact that more was better. If two companies had equivalent product lines but one was more successful than the other, this was attributed to the strength of the brand. If you put more billboards on highway 101, then obviously, you had a good brand. If you could afford $2.2 million for a 30 second Super Bowl commercial, you were building a great brand. And if you threw a $12 million launch party to get The Who, Kiss and Tony Bennett sing the praises for your video compression, well that was one heckuva branding strategy. Writing software that worked and shipping actual products could wait, but building the brand was critical.

This approach to branding is a lot like the way the Church of Scientology purports that moments of pain known as "engrams" cause problems in people's lives. The Scientologists' way of ridding someone of these negative engrams is to undertake extensive "audit" tests that not only rid you of engrams, they also have a tendancy to deplete one's bank account. Not surprisingly, many marketing consultants begin by conducting a "brand audit" whose inevitable conclusion is you need to spend more money.

About the author
Zack Urlocker is a pseudonym for a Silicon Valley software executive.  Don't tell his mother he works in marketing, she thinks he's the piano player in a whorehouse.


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