Mystery of Marketing

Mystery of Marketing

 

Are You Producting or Marketing?

 
Marketing, central to every business, is a mystery to most people. Insane! (Scroll down to read “The Mystery of Marketing,” which I wrote in 1989)

Companies can’t brand, increase competitiveness, or raise capital without excelling at marketing — impossible without fundamentally understanding the definition of marketing. And, to know marketing requires grasping the meaning of market, its root.

Many folks, especially those in techdom, can’t define market — constantly referring to their products as markets. Incorrect! They suffer from technologica erotica. They’re producting, not marketing. They’re jargon junkies who have trouble discerning between fads and trends.

Widespread obsession with producting is why 95% of companies dwell in the white noise with weak, unfathomable brands and excessively high costs of sales, capital, and media.

Words Matter: Assets aren’t liabilities; arteries aren’t veins; products aren’t markets!
 

 
A market is a group of customers & prospects: people, not products or technologies. Ergo, there’s no such thing as a “competitive” or “crowded” market — despite what you’ll read in the trade and business press: Customers don’t fight each other over vendors!
 

 
An industry is a group of vendors that supply the market with products and services. There is a competitive industry. And, an industry can be crowded — until the weak players quit or consolidate.

The marketplace is the nexus where the industry and market meet to exchange value (see “The Mystery of Marketing” below).

 

Examples of Media “Market” Mistakes

Example 1: On August 19, 2010, Intel announced its $7.68B acquisition of McAfee, a leading purveyor of security software. In the WSJ article reporting this news appeared the following paragraph:

Intel, based near McAfee in Santa Clara, CA, supplies more than 80% of the microprocessors that serve as calculating engines in PCs and server systems. Though that business is healthy right now, the company has long acknowledged that, without diversifying, it can’t grow any faster than that market.

See a problem? The last sentence: “… can’t grow any faster than that market.” There is no market — only an industry segment, a product category. Products (PCs and server systems) are not markets. This linguistic faux pas, repeated in every business publication and inside most companies, lies at the root of branding failures.

Am I nitpicking? Hardly. Tell a judge that arguments and statements are synonymous.
 
Example 2: On September 2, 2010, Dell announced its exit from the bidding war with HP over data-storage vendor 3PAR. TradingMarkets.com’s reportage included this paragraph:

The public bidding war between HP and Dell came as the two personal computer giants are striving to diversify their business and push into enterprise data center as well as other more profitable markets.

Notice that last word, markets? Incorrect. The proper term is industry or product segment. Am I nitpicking? Absolutely not. Tell a CPA that assets and liabilities are synonymous.
 
Example 3: On March 2, 2011, Apple announced its iPad 2. TechCrunch’s reportage included this sentence:

After selling 15 million iPads in 2010 and gaining 90% market share in the tablet market, Apple is ready to take the next step.

There’s no such thing as a tablet market. The correct term is tablet industry, business, or product segment. Am I nitpicking? Absolutely not. Tell a physicist that a proton and electron are synonymous.
 
Example 4: On May 10, 2011, the Wall Street Journal reported that Microsoft will purchase Skype for $8.5B. Its reportage included this sentence:

Skype could play a role in Microsoft’s effort to turn around its fortunes in the mobile-phone market, an area where it has lagged badly behind rivals Apple and Google.

Problem? There is no mobile-phone “market.” Industry, business, or product segment would be the correct term. A product is a market as an artery is a vein.
 
Example 5: On August 18, 2011, FoxNews.com reported that HP will jettison its tablet, smartphone, and PC divisions. This article is chock-full of market malaprops:

high-end server and software markets, worldwide computer market, 12.9% of the worldwide market, 10.7% of the market — which should have been labeled industries, shipments, businesses, or product categories

The sole proper use of market in this article: “The move echoes one from IBM, HP’s rival for the enterprise market [correctly meaning customers], which in 2005 sold off its computer business to Lenovo, the biggest maker of PCs in China.”
 
 

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The “Mystery” of Marketing

By Marc H. Rudov

(originally published in May 1989)

 
More Than Semantic

In late 1988, John Cullinane, when explaining in a Boston Globe article the demise of his software firm, Cullinet, admitted that his troops had adopted an attitude of “knowing better than the customers what their needs are.”

Why is this fundamental violation of marketing tenets such a common occurrence? Why is marketing such a mysterious process? I have concluded that too many firms misunderstand and misuse the root term of marketing: market. They overlook the differences between a market and an industry, and between marketing and sales — distinctions that clearly are more than semantic.

Market is a term that collectively characterizes individual people or companies by their common activities and attributes — geography, demography, commerce, sophistication, etc. — whose similar personal or commercial needs and desires present a business opportunity, in the form of products or services, to anyone clever enough to recognize, address, and satisfy these needs and desires.

A market, therefore, is composed of current or potential customers for your product or service, but is defined by your customers’ needs, not by your product or service. Remember, a market is people, not things. So, when speaking of markets, think about the people who own, use, and benefit from your product. Think about why they bought your product. Don’t dwell on your product and company, which reside on the “industry” side of the scale.

Akin to Energy

Despite all his showmanship, Donald Trump, the New York-based real-estate developer, is a master practitioner of this principle. Trump may be in the real-estate business, but he doesn’t erect buildings. He skillfully provides solutions to satisfy his customers’ needs for fantasy, opulence, and prestige. He knows that human behavior is immutable, and he continually strives to identify opportunities to profit from that knowledge. Donald Trump clearly understands what a market is. His customers spend billions of dollars to prove it.

Furthermore, a market is akin to energy: it can be neither created nor destroyed. Marketers don’t have that power, although many think they do. The best marketers can do is discover, ignore, cultivate, exploit, manipulate, anticipate, excite, and compete for a market — but never create one. Why? Because a market is people — their money, logic, and emotions. They already exist.

Yet, company after company boasts that it has “created” the market for PCs, for minicomputers, for voicemail systems, copying machines, microwave ovens — for every new technology. This hubristic thinking always leads to trouble, because it takes the marketer’s mind off the market and places it on his product, technology, or company, where it doesn’t belong. Even companies as successful as IBM periodically admit that they lose sight of the market. Remember the PCjr? I call this dysfunctional behavior technologica erotica.

There is no market for microwave ovens, but there is a market of people who desire convenience cooking. A microwave-oven industry, yes. A market, no. If, tomorrow, someone invents a replacement for the microwave oven, does that mean the convenience-cooking market will have been nullified? Of course not, because the market is not defined by the product. People still will want to cook a potato in eight minutes or fewer; they won’t care how it’s done.

In the commercial arena, the same holds true. For example, companies always have had and always will have the need to produce correspondence, perform bookkeeping, control inventory, store records, compute “what-if” scenarios, and manage personnel. What has changed through the years? The products and technologies that satisfy those needs, not the basic needs. We’ve seen manual solutions evolve into many variations of automated ones — from those based on mainframes to those built around minicomputers, then PCs, then networked workstations. These innovations are still solving the same problems.

In the early 1980s, Digital Equipment Corporation [which became subsumed into Compaq and then into HP] was completely surprised by IBM’s quick prosperity in personal computers. DEC was so enamored with its minicomputers that it missed the opportunity to profit from solving customers’ business needs in a revolutionary new way.

Ken Olsen, DEC’s president and founder, steadfastly refused to admit the utility of PCs, despite the changing world around him. He lectured the buying market instead of listening to it. Ironically, DEC’s original success with minicomputers had come at the expense of IBM’s infatuation with mainframes; later, IBM was beating DEC at DEC’s own game. It pays to view a market as people, not as products.

Distributors Are Not a Market

Some companies, especially in the computer industry, view their distributors as a market — simply because their distributors are demanding and want to be satisfied. This is an incorrect association, because distributors are not end-users of the products they sell. Distributors are business partners — the indirect sales channel. And, like all business partners, they are demanding and want to be satisfied.

Querulousness, however, does not a market make. Remember, a market contains paying customers. When you begin believing that your distributors are a market, then you’ll neglect the people who actually buy and use your products. That neglect will lead to uncompetitive products and lost customers.

How do marketing and sales relate to each other? It depends on how you define selling. Some people think selling is convincing customers to buy your product or service. That’s old-fashioned hucksterism.

Actually, professional selling is helping a customer define his needs and desires, and then persuading him that your product or service addresses his needs and desires. This approach requires a detailed understanding of the customer before you even discuss what you have to offer. Isn’t the same true of marketing?

Opposite Views Through a Telescope

It’s no coincidence that sales and marketing processes are virtually the same; it’s just that their scales are different. Selling involves helping one person at a time — a market of one. Marketing is helping masses of people or companies simultaneously — with the deep understanding of what each customer needs.

Marketing and selling are interdependent, like the two opposite views through a telescope: from one end you get a wide-angle shot (marketing), from the other a narrow vista (sales). Marketing is macroselling; selling is micromarketing. CEOs who frequently make customer calls, like Hewlett-Packard’s John Young, understand this principle viscerally.

Becoming a marketing success requires understanding the fundamental definition of a market. Once you accept that you can create products and industries but only serve markets, then you will remove the mystery from marketing and become a more-effective competitor.
 

Copyright © 1989 by Marc H. Rudov | All Rights Reserved

 

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