Marketing Matters! The Reemergence of Product Marketing

1. Marketing Matters! The Reemergence of Product Marketing Macrovision SoftSummit October 2004 Paul Wiefels Managing Director The Chasm Group, LLC © 2004 The Chasm Group, LLC.

2. The Marketing Agenda of This Decade • The Category Challenge • The Solution Challenge • The Positioning Challenge

3. The Seven Questions: A Dynamic Process to Align Product Marketing Strategy and Execution with Market Realities • Status of the environment: What’s going on now? • Status of the category: Has category power changed? • Status of the company: Has company power changed? • Status of the strategy: Do you have a winning strategy? • Status of resources: Are you allocating resources optimally? • Are you organized to succeed? • Can you achieve the change?

4. Status of the Environment: What’s Going On Now? • What strategy has led to the success you have experienced to date? What are others in the category doing? • What has changed such that this strategy may or may not be optimal? • How is this change manifesting itself in day-to-day business dynamics? • What are the implications long-term?

5. Status of the Category: What is the Future Potential of the Category • What are the investable categories? Can a category be created? • How are categories now segmented? • Is your category power rising, static, or waning? • Is a new category emerging and influencing your position?

6. Category Management: Strategic Alternatives • Be patient • Exit by under-performers • Disaggregate • Consolidate • Focus on vertical markets • Integrate horizontally • Integrate vertically • Realign value-add model • Transcend & transform • Disrupt & overthrow IBM, Microsoft Corning, TI HP/Agilent, Perkin-Elmer/ABI Computer Associates Accenture, PeopleSoft SAP, Veritas IBM, Oracle Kodak, HP, Unisys Apple, Ebay, Google Affymetrix, Rambus

7. Key Takeaway: Market Leadership = Market Power • Market power originates in the category • Category advantage precedes company advantage • You are only as powerful as your category • Companies compete for power within category • Power is measured by market share • Market share positions tend to be lasting • Implications for market development • Execute on the power you have today • Plan to accumulate more tomorrow

8. Status of the Company: What is the Future Potential of Company…and Strategy • Are you number one in the category? What are your chances? • Category creation vs. category domination • If yes, what is your strategy to expand and extend your power? • If no, what are you doing to change the competitive advantage dynamics? • Category modification • Disruptive technology / business model • Premature consolidation • Source of competitive advantage

9. Sources of Competitive Advantage CAP Offer Power Customer Power Industry Power Category Power GAP

10. Key Takeaways: Back to the Basics Five questions for sales and marketing organizations: • How vulnerable are you to fundamental marketplace changes? How can you exploit fundamental marketplace change? • How important or powerful is the category you are competing in? Is this power rising, falling or static? (You can’t be more powerful than your category.) • How important/powerful can you be in the category? • Do we have the right strategy in place to reach your objectives? • Does your organization understand what it takes to compete? Can you execute on the imperatives suggested by the previous questions?

11. The Product Marketing Agenda • The Category Challenge • The Solution Challenge • The Marketing and Positioning Challenge

12. Product Marketing Orchestration: Key Questions to Sales and Marketing Efforts • What are you best at that no one else is? How does that “translate” to proposed customer benefit? • Technology – product - solution • Why should a customer care? • How much better than current tech/product/solution? • Which markets desperately need you? • Urgency over “nice-to-haves” • What buyers “gotta” have it? • Fundable target • What problems do you solve? Or opportunities you exploit? • How do customers talk about the problem? What is their point of view? • What is the real cost to bring solution to market? • Time & resources to deliver

13. Orchestrating the Solution: Building the Value Chain Product Providers Service Providers Customers TechnicalBuyers Technology Consulting Products &Consumables Sales &Support End Users CustomerService EconomicBuyers Applications All these linkages are requiredfor a new technology wave to succeed

14. Orchestrating the Solution: Market Development Strategy Framework Source of money 1. Target Customer 2. Compelling Reason to Buy 3. Whole Product 4. Partners and Allies 5. Distribution 6. Pricing 7. Competition 8. Positioning 9. Next Target Source of demand To fulfill the compellingreason to buy Needed for whole product Function of whole productintegration complexity Function of all other factors listed For the customer's money Relative to competition Next move This template holds forall stages in the Life Cycle.

15. “This just isn’t a priority.” Key Customer Challenge: Market Education • Compelling, hard $ payback • Money not spent • Employee productivity • Intangibles – e.g. customer satisfaction • Payback model is an educational tool – the process is where value is derived, not the end number • Market an independent 3rd party survey • Analyst references lend credibility • Customer references can’t be beat

16. “You look like 10 other companies who called me this week.” Key Customer Challenge: Competitive Differentiation • Ask who called? Look for consistency • Have a response • Put your competition in a viable box • Listen to customer’s own words • Create your positioning, messaging, “category” using customer’s words • Visualize the decision maker – what is compelling to him/her • Be consistent with your messaging • Involve CEO in every deal

17. “We can’t pay that much for an unproven product.” Key Customer Challenge: Creative Pricing Models • Enterprise software, direct sales model must get over $500K/customer lifetime value • Need to get a foot in the door • Subscription/term licenses • Pilot programs • Payment terms, e.g. cash on go-live • Modular packaging • Pay as usage expands • Must have easy, fast deployment and quick payback

18. “I believe in this but we have to get _______ to pay for it.” Key Customer Challenge: Business Case • Build a compelling business case in the language of the dept with the budget • Get outside industry data to substantiate • Get analyst endorsements • Modular deployment – see/feel the difference • Mandate usage

19. “I will buy this but you need to deliver _________to go with it…and support the whole thing.” Key Customer Challenge Challenge: Distribution and Partnering • OK to do it all for your first few customers • Forget the big guys as partners – you’re a flea • Find small but smart/ambitious partners who want to grow with you • Repeat regionally

20. Orchestrating the Solution: Pinpoint Market Entry Point with Customers • Meet with 30 prospects and customers • How are they organized? • Who has the budget? • Who makes the decisions? • What are their priorities? • Where is greatest pain? • What do they do now to address it? Listen Learn Refine

21. Takeaway for Market Development Execution Align your actions with customer goals and needs Customer Goal:Competitive Advantage Customer Need:Potential of Technology Vendor Goal:Validate Technology Strategy:Demo the Technology Skills:Technology Proficiency

22. Takeaway for Market Development Execution Align your actions with customer goals and needs Customer Goal:Competitive Advantage Solve Problem Customer Need:Potential of Technology Complete Solution Vendor Goal:Validate Technology Segment Share Strategy:Demo the Technology Show ROI Skills:Technology Proficiency Customer Intimacy

23. Takeaway for Market Development Execution Align your actions with customer goals and needs Customer Goal:Competitive Advantage Solve Problem Adopt the Obvious! Customer Need:Potential of Technology Complete Solution Make Safe Choice Vendor Goal:Validate Technology Segment ShareMarket Share Strategy:Demo the Technology Show ROI Gorilla Power! Skills:Technology Proficiency Customer Intimacy Closing Deals

24. Takeaway for Market Development Execution Align your actions with customer goals and needs Customer Goal:Competitive Advantage Solve Problem Adopt the Obvious!Extend Paradigm Customer Need:Potential of Technology Complete Solution Make Safe Choice Better Value Vendor Goal:Validate Technology Segment ShareMarket Share Profitability Strategy:Demo the Technology Show ROI Gorilla Power! Segment Focus Skills:Technology Proficiency Customer Intimacy Closing Deals Relationship Mgmt.

25. The Product Marketing Agenda • The Category Challenge • The Solution Challenge • The Positioning Challenge

26. The Importance of Positioning and Effective Communication • I don’t know who you are. • I don’t know your company. • I don’t know your company’s product. • I don’t know what your company stands for. • I don’t know your company’s customers. • I don’t know your company’s record. • I don’t know your company’s reputation. • Now—what is it you wanted to sell me? For customers and the market at large…

27. Conventional Wisdom • Start-ups are "too busy" to methodically think through & analyze the market development and product positioning processes • “Strategy and vision” is often someone’s dream of the future • This false assumption can lead to companies that suffer from a combination of: • “Vision du jour" (creates stress and skepticism inside the organization) • Unaligned key constituencies (management, employees, investors, customers, Board members) • Haphazard customer targeting and selling processes • Incomplete product feature sets

28. Positioning Goals • Early Market: Defining the Market • Create the problem…create the solution • Chasm Crossing and Bowling Alley: Building the Market • Define the customer, the problem, the benefit and the differentiation • The goal is to create relevancy, not necessarily superiority • Tornado: Dominating the Market • Primates and royalty • Main Street: Extending the Market • Products, offers and brands • Goal is preference

29. Top Categories of Positioning Differentiation • Low cost provider • Value provider/ROI • Innovator • Domain expertise • Leader = safety • Customer intimacy • Top performance • Top service • Depth or breadth of solution • Low risk = evolution (move when necessary)

30. Create Alternatives…Do not Emulate Existing Positions • For every market, establish leadership position or create credible alternative to market leader • Do this by establishing relevance • Relevance is not based on what we sell, but on who we serve and why Competitor ‘A’ You “Flameouts” Category Pool This is “Create The Alternative” Marketing

31. From Positioning to Communication • What it isThe Product • What it doesThe Benefit • What it meansThe Effect • Why I should careThe Motivation defined by defined by defined by defined by

32. Product-Centric to Market-Centric Communication • Newest technology Next generation application • Elegant architecture Emerging standard • Best product Growing installed base • Easiest to use Most 3rd party support • Attractive pricing Cost of ownership • Unique functionality Quality of support • The next “big thing” Relevant alternative

33. Key Takeaways • Know your category and its power. • Devise the right strategy based on your key assumptions; not on what you’ve always done…or, necessarily, what others have done. • Innovate your marketing! Ask the important questions. Regard marketing as a source of competitive advantage. • Position first for relevance. • Market, sell and communicate the way the market wants it!