Sunday, December 11, 2005

The Role of Marketing

I’ve spent most of my career in technology marketing: Product management, product marketing and market communications. I’ve launched dozens of products, run departments and worked with engineering teams over the last 25 years. And yet, I’ve always felt that I had a “Kick Me” sign on my back, because in high tech, marketers are second-class citizens.

Years ago, when I worked at HP, I joined the company as a product manager. I spent a year in marketing before I got so frustrated about my lack of influence that I transferred into the lab. As an engineer, I had far more say over how products turned out than when I was in marketing. This pattern has been repeated again and again.

I was prompted to write this entry by the cover article in Business Week a few weeks ago, one of the many articles that have been published lately about Google. Toward the end of the article, the authors discuss the “pecking order” at the company: Engineers come first, followed by product management (which is closely aligned with engineering at Google,) while sales and marketing are at the bottom of the pecking order.

I don’t mean to pick on Google, because this pattern is repeated at most high tech companies. Don’t believe me? Try this simple test: Go to the websites of several high tech companies. Click on “Company” or “About Us,” and then select “Management.” Look at the management roster, and see who’s at the bottom of the list. Most times, it’ll be marketing and sales.

High tech companies are famous for confusing sales and marketing. Sales generates revenues for companies, while marketing supports sales, figures out what products are needed for future growth and profitability, and does whatever it can to support customers so that they buy again and again. By its nature, sales has a short-term focus; the emphasis in sales organizations is to “make the numbers” for the current month, quarter or year. Marketing has to have a longer-term focus; it must figure out what products and services are needed in the next months and years, and how to communicate the benefits of those products and services to the salesforce, customers, investors and the press.

One of the most common situations in high tech is the company that has no “second act.” This is a company that launched a successful product or service, but couldn’t follow up with an equally successful second product. Silicon Valley is littered with the corpses of companies that fell into this trap. It’s the job of marketing to figure out what that second act should be, by talking with current and potential customers, talking with engineering for their concepts and considerations, and analyzing the competition. That doesn’t mean that engineering shouldn’t be developing new products and technology independent from marketing, because that’s where most of the true discontinuous innovations come from. However, engineering, marketing, sales and finance have to tightly coordinate their actions, or you run the risk of “getting on your horse and riding off in all directions.”

I would love to see high tech companies take the discipline of marketing as seriously as they take engineering, but I’m not likely to see it in my lifetime. However, there is one branch of high tech that does take marketing more seriously (because it has to,) and that’s consumer products and services. Engineering-driven products that are difficult to use or don’t fill the needs or wants of a reasonably large consumer audience will die a horrible death.

A good example is Sony’s past digital audio players. For a number of years, Sony went its own way, using its proprietary ATRAC format to encode and protect the songs, and a program called SoundStage to manage the PC-to-player connection. Even though virtually every portable player could handle MP3s, Sony required that MP3s be converted to ATRAC by SoundStage before they could be copied to its players. Users of other formats with DRM (such as Windows Media and AAC with Apple’s FairPlay) were completely out of luck.

The result was that sales of Sony’s players were miniscule, while Apple’s grew until the company reached its current point of market domination with iPods and iTunes. It’s only recently that Sony finally acquiesced to the market and began supporting other formats. If Sony had bothered to listen to consumers when it was planning its original players instead of insisting on ATRAC because it was a “better” format, it might dominate the market now and Apple would be an also-ran.

It’s essential that companies know who their customers are, and talk to them. It doesn’t matter whether a company sells to businesses or consumers—the basic principles are the same. Products and services have to meet customer needs in order to sell. If it’s a truly innovative product, customers may not know that they need it, but it’s marketing’s job to identify the needs and wants that the product fulfills and communicate them to the salesforce and customers.

Marketing, especially for companies that want to survive past their first product, is as essential as engineering. I firmly believe that the survival rate of new ventures will dramatically increase as more companies take marketing seriously. Will that ever happen? We’ll see.
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