Challenges facing ICT companies

1. Challenges facing ICT companies Bridge Tools advisers ICT companies often jump a step in the process of building their businesses as they start out with focusing on products and service solutions rather than on the needs & wants of their customers. A broad definition of a business can be: “Bringing a value to a market at a profit” Identifying the market is the first challenge that faces the business and the second step is to create an essential value offering in the shape of a product or a service offering on the market that is targeted. The third and final step is to communicate with the market to connect the value offering to the buying customers. 1. Market identification A market consists of people and/or organizations and segments of a market consists of bundles of people/organizations with common needs & wants. In example, on the market for wrist watches there are segments of “function” – people that are buying watches just to get the time and other functions such as alarm presented , and “prestige” – people that use the watch to show off and signal that they are winners. A watch business must identify which segment to enter before starting to produce a certain value offering in the shape of a watch product. 2. Value offering – product or service solution When the decision is made on which market segment to target, the product or service solution is much easier to create. And this solution should be made on the basis on which needs and wants the people of the chosen segment have. The needs and wants drive the value perceived by the target group. In example, the watch making company decides that the “prestige” segment in big cities around the world is both large enough to offer volume and highly priced to offer high value per purchase. Consequently, the producer builds a high valued, prestige loaded wrist watch. 3. Marketing communication With a clear market segment targeted, and a product developed that offers optimal value to the buyers, the third step is the marketing communication. This can take all kinds of shapes, and the term “marketing mix” (Kotler) is often used to describe what communication tools that can be used to connect the product or service offering with the target group. In the case of the watchmaker, “prestige” watches could be sold directly online or through special watch stores in large malls. All supported by advertising in magazines read by the target group. Information & communication technology (ICT) companies have a tendency to jump right in to the second phase of this process – straight to products and services, not prioritizing the first step of identifying the needs and wants of the target group. There are several potential reasons for this.  ICT companies generally have a vast majority of key managers that have technological educations. The engineers that are developing products often have a stronger position in the companies than marketing managers that work with customer research that is often influenced by psychology and human “soft” science rather than hard, engineering facts. There is a built-in cultural clash between product making and customer research within the companies. One example of this might be the Telecom industry that is selling upgraded GSM systems under product acronyms such as 2G, 3G, 4G etc. What needs and wants are they targeting, and what values are they offering?  Many high profiled ICT companies are run in most functions by charismatic founders, and these founders often have a product-goes-fast-to-market approach. Most huge market successes, however, are happening when these founders excel in all three steps of the process. Apple has certainly hit the customer needs and wants for ease of use and well-designed smart phones, tablets and laptops. Google, led by Brin & Page, are revolutionizing the whole marketing communication process by monitoring every individual consumer and directing targeted value offerings at low cost. They would not have succeeded without a holistic approach covering all three steps of the marketing driven business building process. But how many ICT companies strike gold the way Apple and Google has done? In conclusion, building a successful market driven business in any industry demands competence in all three steps of the process: 1

2. Challenges facing ICT companies Bridge Tools advisers Stockholm Kontor: Östermalmstorg 1 114 42 Stockholm Sweden www.bridgetools.se 4