3 min read
October 1, 2009

The Press, October 2009

How’s this for a catchy magazine advertisement headline? “Apple Introduces the First Low Cost Microcomputer Systems with a Video Terminal and 8K Bytes of RAM on a Single PC Card.”

That was the attention grabber in a 1976 magazine advertisement for the first Apple personal computer (PC).

Fast forward 33 years and Apple need little more than their logo in an advertisement to tell a powerful story. This contrast shows how much markets, especially technology ones, can shift over time and how your marketing must change to fit.

In the 1970s Apple was only appealing to a small cohort of people who knew what a computer was and had the skills to use one effectively. The advertisement had a small picture and then hundreds of words of closely typed information about the fancy new technology.

In immature technology markets like that there are only early adopters who tend to be very knowledgeable and therefore want a lot of technical information. They don’t need to be told the benefits – they understand how they can apply the technology to their advantage.

As a market matures and grows the dynamic changes. You have more people who know less about the technological details. In the 1980s people who had no idea of what a motherboard was, knew there was something useful about this machine that could process lots of information so quickly.

In this environment, and as more competitors enter the market, companies can’t continue to differentiate just around their product features. These kind of consumers will need more to help them decide what’s best.

Technology companies don’t always get this right. Their basic marketing to the early adopter group works because they are passionate and knowledgeable about the technology. But continuing to market that way to the larger and more profitable audience doesn’t work and usually results in them losing market share to more savvy competitors.

Microwave ovens are an interesting example. The first commercial products were introduced in the 1950s. Early buyers were those who understood (and weren’t scared of) using radar inside a metal box could heat food, and could afford the expensive technology. Originally developed and marketed by a US defence contractor called Raytheon they struggled to find a market.

Microwaves went from scary and expensive technology to something many households desired, as more consumer-oriented manufacturers made products that were simpler and cheaper. A mass market of people started to understand that these things delivered a faster, easier way of cooking food.

According to Wikipedia, microwave sales increased from 40,000 per annum in 1970 to 1 million a year by 1975. Now market penetration is estimated to be 90% and you can buy one at the supermarket with your bread and milk.

The PC market is heading the same way and the traditional vendors are trying to respond. For example Dell Computer, one of the early leaders in this sector, is trying hard to regain lost ground in the PC industry.

According to Businessweek Magazine, Dell was valued at $US 100 million in 2005, which was more than the combined worth of rivals Apple and HP. Now it is worth less than a third of its archrivals.

This was built on the back of great strategy in a maturing market. Consumers had become familiar with PCs by the time Dell emerged in the late 1980s, but most manufacturers differentiated around their processor speeds or graphics capabilities. Dell came along with the ability to quickly deliver you a PC configured to your own specifications and ordered over the internet. It was fast, easy, cost-effective and you still got a product as good as any available in a computer store.

As fast as Dell rose to prominence existing and new competitors started to challenge strongly. At one end quality brands like Apple, HP and Sony and at the other value offerings like Acer and Lenovo. Consumer choice exploded as more and more competitors entered the market, and Dell failed to shift fast enough in this maturing market.

Dell are now responding by focussing more on the customer. When hiring a new design chief recently they didn’t go for a PC industry veteran but someone out of Nike, who had been developing shoes and sunglasses, an indication they want to compete head-on with the uber-cool Apple products.

Dell have also reorganised the company, structuring it around customer segments rather than the traditional approach of product groups. And under the leadership of ex-pat Kiwi Andy Lark Dell have been a pioneer in using social media tools like blogs, social networks and twitter to improve communication with customers.

Whether their strategy is successful will ultimately be determined by customers. But at least they are trying to shift to meet the needs of a more mature market, and have shown they understand what it takes to do so – understanding it is less about the product and more about the customer.

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