Market channels

The days, if they ever existed at all, when prospective buyers were supposed to beat a path to the factory door are long gone. Today, businesses, are participating in a global market that exerts a direct influence, even on companies only operating in their home market. 

Conversely the opportunity to sell products and services to a wider market place has never been better. Moving product from the point of manufacture to the ultimate end user may involve a lengthy chain of participants, or be delivered direct.  With the advent of the Internet and e-commerce continuing to exert changes on the markets addressed and channels to serve them, new business models have emerged. Sales teams are much slimmer than before, product volumes often higher and market channels, distribution and delivery changing to the new paradigm.

Traditionally serving a large customer base, has been through an intermediary – wholesaler, stockist, distributor, dealer or agent. The manufacturer is relieved both of shipping to multiple end customers and the cost, and risk, of carrying perhaps thousands of small accounts, in return for a discount against the published selling price plus marketing and training support. Working through intermediaries can present a number of marketing challenges, in terms of pricing, profitability and keeping in touch with the end user. A term that has been introduced in the last few years is disintermediation – the process of bypassing distribution and going straight to the end customer. Direct selling demands a high level of product quality associated with a ‘plug and play’ out of the box simplicity, to avoid high levels of ‘expensive to deal with’, returns. The use of call centres and the Internet linked with global carrier services and credit payment methods have now given the manufacturer the mechanisms to bypass traditional channels by appealing directly to the end user, but the investment in promotional costs with this model is high.

Finally it is important to remember the roles of specifiers and influencers, although not part of the supply chain, may still wield the real specifying influence. The end customer is often not just buying your product, but a complete working system where a system integrator or consultant may be a key player in bringing together a range of products to carry out the tasks needed by the end user. 

The rationale for a technical marketing philosophy

Why is it consumers will pay a premium price for a product far in excess of its intrinsic cost? The answer is that the product bears a logo representing a brand that is desirable to the consumer. They are not just purchasing a product – they are investing in a life style choice, ownership of that product is aspirational and makes a powerful statement to their friends and associates about their own values and status. Of course the brand owner has invested serious money to create that desire and positioning of their brand intended to convey instant recognition and comprehension.

 So do the same marketing techniques work for the less glamorous world of business-to-business marketing, where budgets are considerably less? The answer is that the general principles of marketing still apply – the challenge is how they are applied. People buying business products and services are also consumers who experience the world of consumer marketing every day, but in their professional capacity will be less influenced by emotional appeals. When buying or specifying b-2-b products the process is not characterised by a spontaneous desire for instant gratification. It is a process of evaluation and consideration which may be quite lengthy. But what might ultimately differentiate one similar product from another is the reputation of the brand of the supplier. Although price will always be important, quality, reliability, technology, availability, post sales support and many other factors may figure in the final purchase decision. Building that reputation for a brand is where marketing performs a vital role in creating an environment where purchasers will ultimately demonstrate a preference for one product over another.

 Marketing should not be confused with sales. It is far more to do with planning for the future, with strategy to keep ahead of fast moving trends, the routes to market, and the means of promotion and delivery that provide the essential environment in which selling can be successful. When marketing technical products, there are many facets to the marketing role. Technical marketing will typically embrace new product development, marketing communications and protection of intellectual property. Instead of the emotional appeal of consumer marketing we recognise that in the marketing space we address of industrial, technical and entertainment technology products, we are more typically engaged with engineers. Accordingly we have introduced an engineering approach to marketing. Engineering brings discipline to marketing, a discipline much needed in controlling the flights of fancy of the creative media types in getting the i's dotted and t's crossed, keeping feet firmly on the ground and keeping sight of the purpose of marketing a product - not in winning design awards. And if bringing engineering into marketing might seem a strange notion, unless marketing is properly controlled and brought in on budget then it will be a disaster. Engineering projects are as much about planning, adherence to schedules and budgets as they are about technology. In fact engineers are increasingly being employed in some surprising areas including many types of management consulting even in the financial sector.

Technical marketing brings the same engineering methodology and thinking to marketing - introducing staffing structures, building the team, setting objectives through the marketing plan, formalising budgets, introducing financial controls, defining schedules and setting specifications for creative projects. Too often companies launch into building a web site, designing a brochure, booking an exhibition stand or commissioning an advertisement without first deciding on what they need to achieve. Design led agencies naturally play to their strengths - a flare for creative designs - and wow clients with exciting images. Arguably engineering marketing, or as we call it technical marketing, lacks some of that wow factor, but what we have discovered is that clients recognise the benefits that our approach can bring to the bottom line. We supply the rationale. And with the increasing importance of the Internet in marketing, a technical competence and comprehension of what works online too. Of course there is a need for professional creativity, but it requires purpose and direction - in short planning, organisation, discipline and control. So engineering marketing solutions works - our clients testify to that.

Common to successful engineering projects and successful marketing is the importance of planning and testing first. Our technical marketing philosophy helps engineer marketing solutions that support and aid delivery of company objectives. Starting at the beginning of the planning process is the marketing plan. Very few companies actually seem to have one any more than they have a formal business plan. There is too often the impression conveyed that the only marketing plan is to repeat last year's pattern of expenditure - usually the last several years - which makes it difficult to find budget for new concepts. All at a time when marketing is rapidly evolving. The usual reason given for not having a formal marketing plan is lack of time. But what is the point in spending money without knowing why or having any benchmark to measure whether it is successful? We recommend not only reviewing the marketing plan at least annually, but also setting the budget that will help deliver the results and company objectives.

Planning needs to be followed by effective implementation. This is an important part of our client involvement – working as part of the team to actually implement the plan at an operational level. By working in partnership with our clients, changing circumstances can be easily accommodated in the plan. We bring experience in a range of marketing disciplines from traditional to evolving online techniques and can handle some or all of these to an agreed plan. The mix will differ according to each client’s own specific needs and resources. Most of our clients now regard Technical Marketing Ltd as part of their team thanks to long standing business relationships.

If you market technical products and think your business could benefit from working with us then get in touch. If you are just interested in what we do then sign up for our e-mail newsletter or just follow us on Twitter or any of the other options offered on the web site. We are here to help businesses succeed.

The value of brands

Although branding is just one element in the marketing process, it helps create ‘top of the mind’ awareness of products and perceptions about the ‘values’ attributed to the products or to the reputation and capability of a service company. 

For successful enterprises, marketing is a company-wide, shared philosophy that places the needs and requirements of its consumer at the center of driving policy forward.  Much thought in marketing has evolved from business-to-consumer marketing where brand has a particularly high profile.  In business-to-business marketing we do not enjoy the huge advertising budgets that can be deployed by the ‘cola’ or ‘training shoe’ marketers generating brand-led demand through creating a desire for the perceived status their products confer on the consumer.  

So a different approach is needed that works at a level affordable to the typically much smaller, specialist companies in the global entertainment technology market. How customers perceive one supplier against another can be greatly influenced by brand and is why a premium price can be obtained because of the good feelings and confidence towards that brand. Brand is the identity that the company creates, the perception that its customers and competitors have of the company and importantly, the values that cause customers to purchase its products. 

Branding is a deep psychological penetration resulting from all aspects of a company's marketing strategy in creating an affinity for a product or service.  To be credible, a brand must reflect genuine values of an organization that buyers can identify as meeting their own aspirations and needs. Many brands have endured for years, because customers recognize consistency and continuity in the products that carry that brand name.  

This is extremely important for capital equipment plant where many consumers in the core of the market only purchase new technology every 15 to 20 years and will often stay with a particular brand despite more intriguing alternatives being available.   It is one of the primary duties of marketing to maintain and enhance the brand reputation. 

Launching a new product

Once a new product development project has been specified and the brief established, a large part of the marketing task will be concerned with progressing the project from design to production. Usually there will be some schedule drawn up for this programme, whether a basic Design to Production Schedule or elaborate Gant charts and other planning tools, all of which should include not just the technical activities, but also the marketing ones as well.

There are many views on how this is approached, whether as a series of sequential activities or as an integrated simultaneous engineering exercise. Some industries are further advanced in these techniques than others. But however organised there will be certain milestones which will lead towards the launch phase. 

Milestones in the R&D phase could be initial feasibility study, prototyping, type testing and may be some market testing. There are mixed views about keeping the concept completely under wraps until it is launched and in soliciting market input at formative stages in the design and development process. 

Moving into production through tooling, planning and pre-production stages is when much of the launch programme needs to be planned and produced. In today’s competitive market place the launch programme will be committed before any pre-production products roll off the line, so prototypes may have to be creatively used in the launch material. But not only are physical examples needed for such things as photography and demonstratation, but also test data is required to support the product at launch. 

It is amazing how companies still forget this essential need and launch a new product without any means to sell and support it. One useful technique is to draw up well in advance a New Product Check List to detail the activities that are required and the timings. It is also important not to launch the product if you cannot fulfill orders. Some major new product failures can be attributed to products that didn’t work, because they weren’t really ready and products that got everyone excited, but couldn’t be delivered.

Innovate or die

New product development is the lifeblood of a business. Failure to innovate will result in stagnation and eventual decline. 

The rate of new product introduction in most markets is now relentless, so just to keep pace calls for a regular flow of new products. Few will be genuinely innovative, most will be evolutionary rather than revolutionary but the evolution will move forward the market’s expectations. So where to start? Having reviewed the focus for the new product and market positioning through preliminary research, it is time to start putting together a brief for the development team and a specification for the new product. Perhaps the most important consideration is the target market. What is the role of the product, who will buy it and use it and what does it compete with or replace? Developing a product without a clear understanding of users needs  will raise marketing problems throughout the process. So it is vital to get this right from the start. 

Today many companies find themselves competing in the global market with all sorts of regional variations due to custom, culture and legislation working against their attempts to develop a single, universal product. One approach could be to develop a core product or technology, which can be adapted or customised to suit different market needs. Such decisions have to be taken before any other work starts and if they are wrong, the product may be loaded with unnecessary costs for any one market, or too bland for acceptance anywhere. The attempt to incorporate everything for everywhere is not only expensive to implement, but results in an unsuitable product for any country. 

Another outcome can be the ‘lowest common denominator’ solution where the product brief meets the minimum needs of its principle markets, but ends up being totally uninspiring and unexciting to everyone. Finally by designing with only one country’s needs in mind, may for want of some simple-to-do considerations at the briefing stage, enable far greater sales to be achieved in many more countries.

New product development

New products are at the heart of any integrated marketing strategy. Even the best executed marketing campaign will not compensate for poor products or products that the market does not want.

So the first stage of any new product programme is research. Initially there may be dozens, perhaps even hundreds of ideas to sift and evaluate, but new products will most likely arise from one of three key drivers:-
     Technology
     Market Need
     Price

Whilst market input is important, it’s not likely to result in any real progress in understanding what to develop. As one commentator remarked, ‘you don’t know, what you don’t know’.

The lack of imagination conditioned by the existing supply chain through to the end user, will deliver a verdict which can be summarised as ‘more of the same, plus a few ‘bells and whistles’ that the competitors offer on their product - and all delivered at a lower price’.

Technology, not surprisingly is a critical driver, either applied to the product itself or to the process of manufacture, or a combination of both. But basing new product development on a new technology platform can be a high-risk strategy unless relevant to the target audience. New technology for its own sake will not succeed unless it also fulfils a market need that the customers are willingly to pay for. But failure to recognise the value of new technology or adopt too late can be equally disastrous. Sometimes the technology is a good idea in search of a genuine user application. The key factor is an ability to bridge the gap between the possibilities afforded by adoption of the technology and the implementation and acceptance by the market.

Finally price can be the driver for a successful new product, but to achieve this will generally require having a lower cost-manufacturing base than any of your competitors. This may be achieved through entry barriers to the market such as high level of investment in plant, or patent controls that are beyond the reach of your competitors and will usually also need to be accompanied by high volumes and a dominant market share.

The role of the Product Manager

As with many marketing innovations the product manager concept emerged from Procter and Gamble, where by way of an experiment someone was charged to manage a brand of soap. It proved successful. 

Applied to the industrial world, the role expanded to manage a portfolio of products and develop new ones. The strength of creating the product management role was the seamless progression through different departments and stages, with someone there to ensure that important issues were addressed and didn't get overlooked between different areas of responsibility. 

One of the weaknesses, often pointed out, was the lack of direct authority. That was still the province of departmental heads. The product manager was therefore required to work by persuasion rather than by dictate. This cross-departmental role needed people of particular skills, who could champion the product internally as well as externally. The term Product Champion was also applied at a later stage. 

With a trend towards smaller operations and slimmer organizations the product management role may no longer be embodied in individual employees, but the task of managing the diverse requirements from concept through production and distribution to sales still demands a similar focus for success. Most companies will have a portfolio of products to which additions and deletions will be made. To drive this forward needs a focus to identify what products to develop, which to exploit for most return and which to delete, and this focus must be market driven. 

Products or services are what the customer ultimately buys. Just as a real estate agent will tell you the most important issue in selling a property is location, location, location, so in marketing terms this could be product, product, product. Without a product or service to offer that actually delivers what customers demand, no amount of promotion, branding and spin can hide a poor product. That is why the role of product management and an effective and well performing product portfolio is so essential to the success or failure of the enterprise.

Target markets & target audiences

Without a good understanding of target markets and target audiences, marketing communications cannot be accurately directed.

The Government defines markets by Standard Industrial Classification (SIC) codes, which are far broader than required by most specialist businesses. Data relating to size and value of particular markets is typically not available, although in some industries trade organisations may take on this role. You will need to estimate the total value of your market, then calculate your share and establish whether the market as a whole is growing or not and set goals for your campaign. Within this market there may be a number of identifiable sectors that have different applications, requiring segmentation of your market place and matching products and services accordingly.

Next we need to identify the target audience and determine the total population. Not all of the target audience will be buyers. Some will have specification influence, others can be advocates and opinion leaders through endorsement of your product. Users who work with the product also have an influence and will feedback opinions to buyers. In structuring a campaign we therefore need to understand the benefits that these various people comprising your target audience are seeking and address communication messages accordingly. The size of the target audience will have cost implications for delivering your message. For large populations, display advertising in the trade press or web site is often cost effective. Readership statistics can be related to your target marketing profile to find the best match, but there will always be a ‘wastage’ factor due to some readers not meeting your classification.

Direct marketing is cost effective in delivering audience specific messages to named recipients, allowing you to communicate at an individual level. E-mail marketing allows considerable scope for fine-tuning to send messages only with high relevance to individually expressed preferences. Once you have a clear view of the target markets you serve and the target audiences you address, then media and delivery methods can be chosen to maximise your marketing investment and achieve your campaign goals.