baby_volume_pacifier

Markets don’t exist

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With that title I just pulled the pacifier out of the mouths of marketers…and many of them will start crying.

But smart business people know better. Compartmentalization is very fundamental human behavior, in our personal life and business. In business the definition of “The Market” is the currency that aims to provide quick answers to everyday questions. The problem with market categorizations is that they are often incorrect, irrelevant, stale and frankly, the antagonist of innovation.

Here is why:

1/ People buy products, markets don’t.
No matter what the scenario, in the end people (not businesses) make purchasing decisions. And since people are unique, so are their complex reasons to buy. A unique mix of psychographics and demographics aided by free-market access to the Internet further emphasizes the power of “You” over the power of “The Market”.

2/ Markets are bad type-castings.
Customer surveys show that the compelling-reasons-to-buy rarely match up with the predetermined definition of “The Market”. And since many purchasing decisions rely on factors unrelated to the product (such as budgets, approvals, personal relationships, operational planning, risk mitigation etc.) a prospect qualification or disqualification within that market means absolutely nothing.

3/ Market definitions are bad currencies.
Since there are no rules for defining markets and everyone gets to dream up their own, the value of that market definition is meaningless. Imagine the value of the dollar if everyone gets to define how much it is worth and print theirs at home. Market segmentation and negotiations on market positions with analysts further deflate the significance and trust in traditional market definitions.

4/ Time changes everything (but markets).
Market definitions (in technology) change slowly yet products that attract new buyers change quickly. That means the definition of “The Market” (to which much decision-making is attached) is always far behind the adoption rate of new products and therefore far behind the identification of a new set of buyers. The minute “The Market” is defined, it has become irrelevant and ripe for disruption.

So, where does that leave marketing? Is marketing dead?

No, but it is time for technology marketers to grow up. The pacifier is being replaced by something else. Something more substantial and meaningful. Food becomes the new pacifier and customers will be feeding it to you.

1/ Listen before you speak.
Literally. Forget about what you as the marketer think of the product, early adopter purchasing decisions are much more valuable in determining how the product is perceived and received. The credibility of new customers counts, more so than the ability of a marketer to spin a story. Spend time with your VP of Sales, in online forums, setup a Google Alert and figure out how to market customer perception.

2/ Manage the promise.
Crucial to the impact of marketing is the credibility of the company promise. Marketing, and specifically Product Marketing is vital in establishing that the promise is fulfilled to the satisfaction of the customer. A few bad words from customers on the internet can cost the company millions of dollars to repair, if it can recover from it at all. So, it is important that the promise to customers does not consist of blatant lies, leads to frustration or bleeds hundreds of support calls. Manage the critical success factors of your promise.

3/ Enable the dialog.
Orchestrate the interaction between customers and prospects and be sure to listen in. They will give you the marketing messages that truly resonate – on a silver platter.

4/ Manage the conversion rate.
Getting crowds to listen or visit the company website is rather simple, getting them to buy the product is more difficult. The company is only measured on the latter and since marketing is usually the scape goat and the first to be questioned when results are down, implementing a mechanism that detects, manages and reports on conversion rates yields invaluable metrics for improvement.

As long as there is macro-economic benefit to using your product, marketing is a very straightforward process. It requires a new class of people who are not afraid to throw the old-class of market definitions overboard and focus on the extrapolation of existing sales success, by simply listening for and consistently reverberating an honest and effective marketing message.

As Don Draper, the biggest ad man at the Sterling Cooper Advertising Agency of the TV series Mad Men explains; I don’t tell stories – I sell product.

 

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About Georges van Hoegaerden

Georges is a serial entrepreneur, venture catalyst, 4x CEO, board director turned innovation economist (by fate). His ideas have raised $14M in venture capital and produced over $100M in returns. More.

  • http://twitter.com/docwilliamson Doc Williamson

    Georges,
    While I don’t disagree with your premise that markets don’t exist in the traditional definition of a market, I do believe that markets exist prior to them being “discovered”.

    The extremely tricky bit of “discovering” a market is in understanding the desires of large numbers of people and fulfilling a “need” or “want” that they themselves could not articulate because they have not seen/found/bought a product that meets that need.  That was at the core of the genius of Steve Jobs.  He took a technological innovation (micro-processors) and marketed them to individuals at a “popular” price point.  But as Jobs pointed out, “market” surveys were useless for him, because people could not know that they wanted something until he had invented it (well, “packaged” the innovations of the technologists into a product).

    This is one of the great advantages of narrow market targeting.  You can go after “sports clothing fans” and chase a large existing market, or you can aim at “female college football fans” and skim off nearly all of that sub-market by being a “first mover” to target that segment.  By uncovering (aka discovering) that sub-market, you open a door.   If you do it well, you buy a shovel and load the coin flowing out of that door into your Brinks truck and whistle all the way to your bank.

    Happy whistling.

    Sincerely,

    Stafford “Doc” Williamson

    • http://venturecompany.com/ Georges van Hoegaerden

      A definition of a market that is open to interpretation is witchcraft. Just like many of the other acronyms we use in technology as freely as we interpret them.

      And no Steve Jobs did not believe in markets either, he believed in marketplaces with a dynamic composition. Apple was fundamentally different because it did not do any “marketing”, Phil Shiller was product marketing (the inverse of “marketing” marketing, if you will) under Steve for that reason.

      Steve and his teams built a great product that he made available to anybody who wanted it, and he avoided any of the targeted market witchcraft and “verbage”. He avoided saying the iPhone was for any specific user, he believed people can make up their own mind if they wanted it, as long as they were fully informed what it could do.

      Apple was great in marketing because, unlike many of its competitors, it did not do any. That is one of the areas in which it differed from any other technology company.

      For more specifics on Apple, read “How Steve Jobs proved Venture Capital wrong” elsewhere on this site.

      BTW: I removed the superfluous links you included in your comment in accordance with the comment policy on this site.

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  • http://venturecompany.com/ Georges van Hoegaerden

    An economist asks to discuss this article in private. I granted him that wish, yet I want all of my readers to benefit from the time I put in answering them. So, below is the posit of an established economist, verbatim:

    “I have just discovered a more detailed answer to you I wrote some time ago and never sent…

    OK, let me put it this way. You start by saying that “The Market” is an abstract construct and then add that it does not exist. Well the word exists to express a reality.

    You say that “People buy products.” People also sing. Thus your expression is also an abstraction.

    You can make your expression concrete only by saying something like “People who buy your products exist” — which means customers. But a group of customers form what? They form your market!”

    ————-

    My answer:
    The problem with these nomenclatures is that they carry no meaning to the real world. The identification of a market suggests there is a collection of people that adheres to that definition. Guess what, people don’t – only those who attempt to target them. And when we start using marketing “hearsay” as the basis for economics, we are on the wrong track. The one we landed on.

    Our economics need to be normalized at a much higher level, not that of monetary relevance but of evolutionary relevance. And when we do, we end up with a completely different branch of what economics are supposed to do. And much of what traditional economists have spend their time on, will within that new definition and framework be considered irrelevant.

    Hence my interest is not to convince economists that the path they have chosen is wrong, in the same way Apple has no interest in conveying the Blackberry folks that their approach to innovation was wrong, despite it previously being wildly accepted by an unknowing public.

    The future of economics lies in the hands of the public, not economists. And I will give them “the tools” to change and understand by what economics they should be governed.

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