Breaking Perverse Rewards

Do you ever wander the paths of hard technology marketing and wonder who’s in control? I’ve been watching the emergence of yet another marketing campaign and find myself breathless at the scope of the folly. What’s most amazing is that this a campaign that’s successful in spite of itself. The product will be abstracted to protect the not-so-innocent.

Imagine getting a mandate to take an existing, entrenched product and opportunistically move the value proposition into a new market segment. Further, imagine this is the second time this effort has been done, with the previous attempt mainly focused at a couple of customers and inadequately sourced. This is a product that’s in demand for the new segment. In other words, you have market pull, so the push marketing should be easy, right? Honestly, here’s the hard part, though: the product will be integrated into an existing product that completely dominates market, depending on how you dice it. Remember that term, “opportunistic” I used earlier?

What this creates is an environment where the entrenched product isn’t perceived as necessary. Perhaps it isn’t. Let’s be honest, just because customers are pushing for it doesn’t mean that it’s incumbent on a company to provide it. Then there’s the domination aspect. Why innovate or update when your product is essentially the ONLY product in the segment? What if I tell you that this segment is currently dominated, but was the successful beachhead as recently as eight years ago for your competitor to eat your lunch…for several years?

This is the rich, profitable fat of the market, so it’s natural to just sit and bask while the getting’s good. After all, this profit can drive research in other, less profitable segments. Moreover, this profit margin is driving shareholder value perception. As long as you keep an eye toward your competitor to verify that they’re still flailing in irrelevancy, you’re good, right?

Here’s the interesting part, though. What if this product can provide up-sells from less profitable segments? It won’t cannibalize your upper segments, but can pull buyers from lower-cost segments into the fat of the land? How do you balance the value prop against the potential investments necessary? What data should you use to decide your investment strategies? How about if I told you that this product’s P/L is atomic whereas all of the other products that form the platform have their P/L peanut-buttered across multiple organizations, hiding true support and development costs?

Are you beginning to see how this could create a rich perverse rewards environment? The person cutting the check can’t even begin to see the forest through the trees because the funding is so out-of-whack. The platform is so dominant that it’s hard to remember the previous threat and losses. How do you develop a cohesive marketing strategy? Do you neglect the product as simply a checklist item? Do you seriously discuss dropping the product each new generation? Do you ever innovate in the market segment?

The strategy is one-part telling the customer to suck it up and deal, one part telling the org that we need to innovate, and one part reject the product. So, there’s no cohesive answer, even from upper management. This leads to marketing thrash and confused customers, a product that doesn’t meet any of the goals.

What’s the answer? I’m no CxO and the only time I’ve run a department, I sucked. However, what I see is that there has to be an apples-to-apples comparison as well as a strong marketing vision. In other words, the product needs an evangelist with credibility across the organization. Honestly, this whole thing drives the point home that anything adopted must have a champion, not only to guide the message, but also to drive management. The question really becomes, how is this person identified? And in this case, WILL this person identified in this case?

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