1Business Horizons, July–August 1996.
CHAPTER 7
To Market or Not…
The Context for Commercialization
Any business text will quickly identify the importance of marketing in a commercial project, and so will I. But here the issues are a bit more complex. It becomes exceedingly important to delineate not only the market opportunity but also the appropriate sales engines—including startups new divisions, franchising, licensing, joint ventures, and so on—as platforms to recognize its potential throughout the product lifecycle.
Marketing is a critical aspect of understanding (and acting upon) how a given product or service integrates into the customer’s perceived needs. It is not a singular function but rather a range of interactions both inside and outside of the organization. Marketing’s position may be best observed in Figure 7-1.
Figure 7-1. Sales/marketing interaction
In ocean sailboat racing, it is interesting to observe the role of the skipper, also known as the helmsman. Usually, it is the owner or a similar commanding figure exercising the helm, looking quite authoritative and sometimes shouting orders for sail changes or directional headings with great fanfare. It’s really quite a photo op, and the implication is that the winning strategy is derived from that behavior.
The unsung hero in this drama is the tactician, who sits below the skipper and is constantly calculating wind direction, sea forces, and relative boat positions. The tacticians are typically hunched over a laptop or other computing device and succinctly issuing alternatives for the captain and crew to follow. The race is usually won by this function.
So it is with a corporation, where the CEO and CMO (Chief Marketing Officer) play analogous roles of the skipper and tactician on the boat. Winning has something to do with the directions set by marketing.
The End of Marketing?
In the period of 2005 to 2009, there were a series of devastating articles predicting the demise of traditional marketing. Fredrick Webster, Jr. and others published an article in the 2005 Sloan Management Review entitled the “The Decline and Dispersion of Marketing Competence.” In it, they reported corporate CMO tenures of less than two years. Marketing budgets fell to single digits and the percentage of revenue reported and staff turnover was rampant. In the McKinsey Quarterly of the same period, half of a group of European CEOs were “unimpressed by their CMO’s performance and felt they ‘lacked business acumen’.” In a similar article published in the Sloan Management Review (Summer 2008), Yoram Wind argued that the discipline of marketing “hasn’t kept up” with the rapid changes of the 21st Century. He cited Tom Freidman’s concept of the flat world, the rise of China, the Internet, and social awareness as the markers of this observation.
What really happened is that the concept of commercial business as we knew it was undergoing a major disruptive set of changes. The concept of marketing had to adapt. In a 2014 Gartner report, called “Key Findings from U.S. Digital Marketing Spending,” James Rivera and Rob van der Mullen found marketing budgets in 315 companies were predicted to rise 8% and that 14% of the respondents planned to spend over 15% of their revenue on marketing budgets and salaries. Laura McLellan, vice president of research at Gartner says, “The line between digital and traditional marketing continues to blur. For marketers in 2014 it is less about digital marketing than marketing in a digital world.” This is a significant increase and bears further consideration.
How could this happen? There seems to be multiple contributing elements. They include:
Breathtaking extension of the Internet into every walk of life.
Mind-numbing extension of smart phones, tablets, and computer usage.
The movement to a global competition for customer, resources, and markets.
The rapid extension of social media such as Facebook and Twitter.
Kindle, Nook, and MP3 in the publishing arenas.
Success of Amazon and other e-commerce.
Trained specialists in web design, viral marketing, and enabling technologies.
New market search engines, such as Google.
Eric Von Hipple, the MIT professor of Innovation, wrote a text entitled Democratizing Innovation ,1 in which he observed that we are rapidly coming to the place where all of us can create our own commercial solutions. He used the example of how we can create concepts on our personal computers using AutoCAD or SolidWorks and then immediately transfer those ideas into parts through the use of rapid prototyping devices. These machines can be purchased on the open market for less than $1,000. Although the output of these devices is limited in scale, materials, and accuracy, it doesn’t take too much imagination to see where this might lead.
But how does all this connect to the commercialization of ideas? It is clear that as we discern how to increase the probability of success, these new channels and marketing tools must be brought into focus. Relying on older marketing tools is no longer sufficient.
The New Marketing Model
Within the context of a new model of the marketing paradigm created by the changes outlined previously, there is a need to look at commercial opportunities in a different context. A starting point is to look at the model from its organizational function, as shown in Figure 7-2.
Figure 7-2. Marketing function
Of the many aspects of marketing that are of interest, two of them have particular focus. The first is a term similar to what pilots call situational awareness. It relates to a pilot’s ability to relate to the environment around her. It measures how well individuals respond to variable changes in that space. Markets rely on that ability. A tool that is employed is a matrix of the Strengths, Weaknesses, Opportunities, and Threats (SWOT). It is graphically represented by models such as the one shown in Figure 7-3.
Figure 7-3. SWOT analysis format
The SWOT analysis is a mainstay of market assessments. In reading many business plans, I often find them presented but with static (one-time) information. In reality, a more accurate perspective would be a kaleidoscope of snapshots along a project’s journey to commercialization. Noting the dynamic changes (and how the project team reacted to them) becomes an important marker. It’s a sensitive indicator of the situational awareness confronting the projects. Tracking changes along the way becomes a powerful perspective about the project’s viability.
There is a potential that the marketing and sales groups operate in conflict. This derives from a lack of clarity about the two functions from upper management. It is the clear responsibility of upper management to define each function to offset these possible conflicts.
To clarify the potential issues between sales and marketing, it is useful to look at some of the critical components of each.
Demographics