Marketing Is Everything
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Marketing Is Everything by Regis McKenna Harvard Business Review Reprint 91108 HBR JANUARY–FEBRUARY 1991 Marketing Is Everything Regis McKenna he 1990s will belong to the customer. And models and products. More broadly, programmability that is great news for the marketer. is the new corporate capability to produce more and T Technology is transforming choice, and more varieties and choices for customers—even to choice is transforming the marketplace. As a result, offer each individual customer the chance to design we are witnessing the emergence of a new marketing and implement the “program” that will yield the paradigm—not a “do more” marketing that simply precise product, service, or variety that is right for turns up the volume on the sales spiels of the past but him or her. The technological promise of program- a knowledge- and experience-based marketing that mability has exploded into the reality of almost un- represents the once-and-for-all death of the salesman. limited choice. Marketing’s transformation is driven by the enor- Take the world of drugstores and supermarkets. mous power and ubiquitous spread of technology. So According to Gorman’s New Product News, which pervasive is technology today that it is virtually tracks new product introductions in these two con- meaningless to make distinctions between technol- sumer-products arenas, between 1985 and 1989 the ogy and nontechnology businesses and industries: number of new products grew by an astonishing 60% there are only technology companies. Technology has to an all-time annual high of 12,055. As venerable a moved into products, the workplace, and the market- brand as Tide illustrates this multiplication of brand place with astonishing speed and thoroughness. Sev- variety. In 1946, Procter & Gamble introduced the enty years after they were invented, fractional horse- laundry detergent, the first ever. For 38 years, one power motors are in some 15 to 20 household version of Tide served the entire market. Then, in the products in the average American home today. In less mid-1980s, Procter & Gamble began to bring out a than 20 years, the microprocessor has achieved a succession of new Tides: Unscented Tide and Liquid similar penetration. Twenty years ago, there were Tide in 1984, Tide with Bleach in 1988, and the fewer than 50,000 computers in use; today more than concentrated Ultra Tide in 1990. 50,000 computers are purchased every day. To some marketers, the creation of almost unlim- The defining characteristic of this new technologi- cal push is programmability. In a computer chip, Regis McKenna is chairman of Regis McKenna Inc., a Palo programmability means the capability to alter a com- Alto-headquartered marketing consulting firm that ad- mand, so that one chip can perform a variety of vises some of America’s leading high-tech companies. He prescribed functions and produce a variety of pre- is also a general partner of Kleiner Perkins Caufield & scribed outcomes. On the factory floor, program- Byers, a technology venture-capital company. He is the mability transforms the production operation, ena- author of Who’s Afraid of Big Blue? (Addison-Wesley, 1989) bling one machine to produce a wide variety of and The Regis Touch (Addison-Wesley, 1985). Copyright © 1991 by the President and Fellows of Harvard College. All rights reserved. ited customer choice represents a threat—particu- Beecham, the international consumer products group, larly when choice is accompanied by new competi- filed against advertising giant Saatchi & Saatchi. The tors. Twenty years ago, IBM had only 20 competitors; suit, which sought more than $24 million in damages, today it faces more than 5,000, when you count any arguedthatYankelovichClancyShulman,atthattime company that is in the “computer” business. Twenty Saatchi’s U.S. market-research subsidiary, had “vastly years ago, there were fewer than 90 semiconductor overstated” the projected market share of a new deter- companies; today there are almost 300 in the United gent that Beecham launched. Yankelovich forecast States alone. And not only are the competitors new, that Beecham’s product, Delicare, a cold-water deter- bringing with them new products and new strategies, gent, would win between 45.4% and 52.3% of the U.S. but the customers also are new: 90% of the people market if Beecham backed it with $18 million of ad- who used a computer in 1990 were not using one in vertising. According to Beecham, however, Delicare’s 1980. These new customers don’t know about the old highest market share was 25%; the product generally rules, the old understandings, or the old ways of doing achievedamarketshareofbetween15%and20%.The business—and they don’t care. What they do care lawsuit was settled out of court, with no clear winner about is a company that is willing to adapt its prod- or loser. Regardless of the outcome, however,the issue ucts or services to fit their strategies. This represents itillustratesiswidespreadandfundamental:forecasts, the evolution of marketing to the market-driven by their very nature, must be unreliable, particularly company. with technology, competitors, customers, and mar- Several decades ago, there were sales-driven com- kets all shifting ground so often, so rapidly, and so panies. These organizations focused their energies on radically. changing customers’ minds to fit the product—prac- The alternative to this old approach is knowledge- ticing the “any color as long as it’s black” school of based and experience-based marketing. Knowledge- marketing. based marketing requires a company to master a scale As technology developed and competition in- of knowledge: of the technology in which it com- creased, some companies shifted their approach and petes; of its competition; of its customers; of new became customer driven. These companies expressed sources of technology that can alter its competitive a new willingness to change their product to fit cus- environment; and of its own organization, capabili- tomers’ requests—practicing the “tell us what color ties, plans, and way of doing business. Armed with you want” school of marketing. this mastery, companies can put knowledge-based In the 1990s, successful companies are becoming marketing to work in three essential ways: integrat- market driven, adapting their products to fit their ing the customer into the design process to guarantee customers’ strategies. These companies will practice a product that is tailored not only to the customers’ “let’s figure out together whether and how color needs and desires but also to the customers’ strate- matters to your larger goal” marketing. It is market- gies; generating niche thinking to use the company’s ing that is oriented toward creating rather than con- knowledge of channels and markets to identify seg- trolling a market; it is based on developmental edu- ments of the market the company can own; and cation, incremental improvement, and ongoing developing the infrastructure of suppliers, vendors, process rather than on simple market-share tactics, partners, and users whose relationships will help raw sales, and one-time events. Most important, it sustain and support the company’s reputation and draws on the base of knowledge and experience that technological edge. exists in the organization. The other half of this new marketing paradigm is experience-based marketing, which emphasizes in- hese two fundamentals, knowledge-based and teractivity, connectivity, and creativity. With this experience-based marketing, will increasingly approach, companies spend time with their custom- Tdefine the capabilities of a successful marketing ers, constantly monitor their competitors, and de- organization. They will supplant the old approach to velop a feedback-analysis system that turns this in- marketing and new product development. The old formation about the market and the competition into approach—getting an idea, conducting traditional important new product intelligence. At the same market research, developing a product, testing the time, these companies both evaluate their own tech- market, and finally going to market—is slow, unre- nology to assess its currency and cooperate with other sponsive, and turf-ridden. Moreover, given the fast- companies to create mutually advantageous systems changing marketplace, there is less and less reason to and solutions. These close encounters—with cus- believe that this traditional approach can keep up tomers, competitors, and internal and external tech- with real customer wishes and demands or with the nologies—give companies the firsthand experience rigors of competition. they need to invest in market development and to Consider the much-publicized 1988 lawsuit that take intelligent, calculated risks. HARVARD BUSINESS REVIEW January–February 1991 3 In a time of exploding choice and unpredictable firm, and alter or otherwise reposition the company’s change, marketing—the new marketing—is the an- image. swer. With so much choice for customers, companies Behind the CEO’s call for “a good marketing per- face the end of loyalty. To combat that threat, they son” were a number of assumptions and attitudes can add sales and marketing people, throwing costly about marketing: that it is a distinct function in the resources at the market as a way to retain customers. company, separate from and usually subordinate to But the real solution, of course, is not more marketing the core functions; that its job is to identify groups of but better marketing. And that means marketing that potential customers and find ways to convince them finds a way to integrate the customer into the com- to buy the company’s product or service; and that at pany, to create and sustain a relationship between the the heart of it is image making—creating and project- company and the customer. ing a false sense of the company and its offerings to The marketer must be the integrator, both inter- lure the customer into the company’s grasp. If those nally—synthesizing technological capability with assumptions ever were warranted in the past, how- market needs—and externally—bringing the cus- ever, all three are totally unsupportable and obsolete tomer into the company as a participant in the devel- today.