Scores of products and services are being launched every
day, and as expected, not all are successful. Invariably we blame it on time of
launch, marketing budget, lack of support from internal departments,
competition…seems like endless list (of excuses).
I believe all failures, or not so successful ventures are
opportunities for self-introspection. An honest try would likely to reveal more
likely reasons than self-pity excuses.
The immediate topic that comes to my mind is “Enterprise vs.
Consumer”. The market (or the people who are considered as “Pandits”) is quick
to tag any product as “Enterprise” or “Consumer”. Sometimes, I do agree, the
product is tagged as per need, like high end servers, industrialized / heavy
duty cleaning systems, heavy machineries…all targeted towards commercial
enterprises. Any exception will be a “true” exception and will be an outlier,
with no concerted effort to woo that customer. Similarly, you have many
products (in fact, most of the products) which are produced for masses and
within masses categories of masses.
What essentially it reveals is that companies’ first need to
define the market segment that they want to serve, then narrow down to
specifics within that category, and finally making an all-out effort to educate
targeted group to influence their decision to buy the given product / service.
Nothing new, it’s an old age practice of marketing; Segmentation, Targeting and
Positioning.
What is surprising is that every organization, their people,
know about it, have access to this information, hire professionals, who live
these practices, and yet when it comes to failure, we try to put the blame on
external factors. Sometime reason could be other than STP; however, those
rarely would be in above sighted reasons; rather I’m sure those could be traced
back to some other fundamental principles.
Coming back to STP, and Enterprise vs. Consumer topic, it is
evident success has been achieved wherever the “needs” have been addressed in a
focused manner. A generic product / service may address multiple segments at
the same time; however, will not be able to command either the premium or
emotional attachment because it would fail to address all needs, especially the
critical ones; which, otherwise will be required to further the interests.
For example, Carrier invented a/c but are they the leader in
a/c market; rather I should ask in which segment of a/c market? Similarly Xerox,
the pioneer in photocopying, and at one point in time photocopy and Xerox were
used as synonym. One can’t ask for a better branding than that as need is
mapped to a brand, and that speaks volumes about the brand equity and image of
that company. What is the state of affairs now?
Apple’s iPod, iPad and iPhone had been successful products.
Some say, it is a hardware marvel, some say it is the software, some others
would say it is the friendly user interface, rather it is the User Experience, what has made it
successful. However, is it a success in every segment of “Consumer” market? Why
is it not an “Enterprise” product? As per my understanding, it is successful,
because it addresses the needs of its targeted segment. It provides all those
services that are wanted or desired by that segment.
Once a leadership, or a monopoly position does not guarantee
success or unlimited access to “created” profit sanctuaries forever, as otherwise
others would not have got a chance over Carrier, Xerox, Nintendo, Walkman etc.
Others got to follow and will follow. So what’s next?
Sell the same product in other markets; market expansion, age
old formulae, and easier said than done. You apply other marketing strategies
to retain the position. Well, haven’t they heard of “Blue Ocean”, “White
Spaces”, why others are interested in “Red Ocean” only?
Ah! They have heard but they are not interested in pursuing
those because it seems unlimited; however, the fact is those are finite, and
there will be overlap, and we would be left with no choice but to compete for
the same pie. May be the intensity would vary.
A new entrant will find it difficult to penetrate the
market, if the existing product is a specific target product. It is not
generalized and as I mentioned above, because of “experience” has created an
emotional appeal. But this “appeal” is not forever, the company has to keep preserving
that with even better experience through refinements to align more towards
needs of that segment. Once nearing saturation, refine or create the product /
service for other segments.
Remember, stripping of features, and selling that at lower
price, to address other segment may give you short term gains; however, there
is no guarantee that it will not hurt your interests in other segments.
Because, if that had not been the case, then Honda wouldn’t have Acura, Toyota
would not have Lexus, Nissan would not have Infiniti…
If you fail with Consumer market itself when you define your
segment a little too broadly, why do you feel it would be a success when it is
targeted across Enterprise and Consumer markets?
With monopoly you may be able to delay the onset of
competition; however, you can’t eradicate that threat, unless you are
reinventing ways to keep your customers attached to your products / services.
That I believe can happen only if you are focused, you are not thinning out
your resources, rather channeling those to serve vital few.
It is simple, as competitors would be strategizing in
attacking your profit sanctuaries, driving up your costs, starting a
multipronged attack to divert your resources at multiple places; you should
also be busy in serving your targeted segments even better, thereby deepening
the emotional attachment, making a counter offensive against your competitors,
and safeguarding your profit sanctuaries, if you can’t create new profit
sanctuaries.
With this, I want to leave you with two thoughts;
1)
As you must have noticed all arguments point
towards validity of STP; it was valid then and it is valid today. If it were
true, what is probability of success of a product which is too widely targeted,
e.g. across Enterprise and Consumer markets?
2)
Windows, though had variants, was a single
product serving Enterprise as well as Consumer market, still it had been a
success. Why?
