Monday, December 15, 2008

How to market the product.

Marketing 101 says gain market share, build your brand and profits will follow. But you need to make sure there’s a real marketing opportunity in the first place. It’s critical that the market structure is compatible with the entry of a new, initially smaller competitor. There have to be "enough" total customers for a given company to gain a share which will be meaningful in its own right. It’s equally important that the company is in a market that’s growing. Markets that are locked up - for whatever reason - mean that young companies will have far greater difficulty reaching and signing up customers. So, check the existence of a sustainable market space and don’t bother with markets that are too small. If there’s only one company in a space, it’s not really a space. However, if your market is too big, competitors will be attracted and encouraged to join in.

You're always in competition with other unknown entrepreneurs. The relevant question never goes away: Do you ship now and enter the market before your competitors, thereby gaining early market share? Or do you wait, improve the product until it's the best available and then steal market share with a superior product?

If you think you have a good idea, implement it immediately and see what happens. If you chose not to ship, you can't ever get the opportunity back and your competitors may beat you to it. Sometimes, you have to be in the market early, even if it means losing money, if you’re to be in the market at all. But if you’re too early to market, you have to wait for the market to develop. In the meantime, competitors recognize that “this is a great market opportunity.” You won’t be alone for long.

Putting something out there and being able to make noise about it is actually a great way to develop software. The hardest thing is to just get the customers’ attention in the first place. Once you get their attention - if you haven’t already pissed them off - you can then do release after release, like Microsoft. By the time you get to release number three, you actually have a working product. Get innovation out into the light of the marketplace as early as possible rather than waiting to perfect it. Once it hits the light, no one can anticipate what it will lead to - or whether it will succeed or not. Trusting the search and sanctioning experiments whose results no one can know allows progress to be made. Progress depends on serendipity and spontaneity, on events that no one can predict or foresee. Don’t ask for answers in advance. Don’t try to create a life without surprises. Trust serendipity. In a high-risk society, pain and prosperity go together.

Professional entrepreneurs use today's cheap information technology to gain a dynamic sense of their customers and competitors. They can pull up their history, the way they pay their bills, what they're talking about - and get a real feeling for them. They can get $10 worth of value for every dollar they spend on information. Jeff Spillers, who was vice president of business development at WebThreads, a startup that produced software to followed users' paths (threads) as they moved through a Web site, describes how his company used the Web to find out about competitors. “We used every search mechanism with every combination of phrases imaginable to turn over every rock and dig out information about other Web tracking companies. Then we used this information to draw a matrix of what features our competitors had. This did two things: it told us who we were up against, and it told us what the marketplace was like. When we went to a competitor's Web site, we looked for indications that they were moving in a particular direction, indications that a big announcement was coming, heightened activity in particular sectors, such as hiring. We looked at what types of jobs they were hiring for, how many ads they had. Almost anything we wanted to know about a competitor, we could find out from tracking its Web site.”

1 comment:

Unknown said...

Hi John,

I wished we'd have tapped you for CEO back in the WebThreads days. Maybe then the company would have had a shot!

Jeff Spillers