The Press, May 2015

Buying wine changes something in your brain, according to a German University research report published in the media last week. While I’ve known this since being introduced to sparkling wine as a young lad, this study had a different insight.

The research had determined, by doing brain scans on different groups of people, that the higher we think a product like wine is priced the more we physically enjoy it. They tested groups of people drinking the same wine but given different information about the wine’s cost, to prove this.

‘‘Understanding the underlying mechanisms of this placebo effect provides marketers with powerful tools,’’ concluded the researchers.

Really? Is this what marketing is about, trying to fool people into getting value from a product?

I would hope marketers could make a more fundamental contribution to the typical business. It’s certainly my experience in the hi-tech sector.

Possibly in consumer-oriented industries like fast-moving-consumer-goods or fashion, they need to focus on these games to find an advantage. In hi-tech you get value from a more back-to-basics marketing approach.

So what is marketing’s real role in a business? It is often seen as being synomous with promotion – about getting the name out there with tools like advertising or publicity.

That’s a bit like saying rugby is basically about kicking conversions. Yes they are important, and can make a difference to the final result, but they come at the end of a lot hard work by a team culminating in the scoring of a try.

The biggest contribution marketing can make to the typical hi-tech business is give it a marketing ‘foundation’. This means that the efforts of the company are focused on a clearly identified ‘market’, i.e. a discreet group of people or organisations with an identified need. And that the company understands why their technology product or service meets that need better than competitive options i.e. their value proposition.

Any other marketing ‘stuff’ is simply decoration.

It’s this marketing foundation that makes all the difference. It gives a business focus, the ability to gain momentum by concentrating its scarce resources on an identifiable group of potential customers.

Developing this foundation can be driven by your marketing team, but it must involve the management team as it is fundamental to the business.

The biggest role of marketing once the foundational stuff is sorted is being focused on ‘‘sales efficiency’’. That is, how can marketing activities increase the efficiency (and therefore lower the cost) of acquiring new customers.

Typically, tech companies are focused on building great products (or services, there is no real difference from a marketing perspective), and then arming a sales force to go out and sell it. Not enough attention is paid to develop a system of generating demand, qualifying that demand and then handing it over to the sales force.

Marketers can be too obsessed with internally focused or nonsales focused activities. Plenty a marketing dollar has been spent on endless iterations of a brand manual or building endless amounts of product information and sales collateral.

Rather the marketing effort needs to be focused on what activities will get more people finding your product, going through an evaluation and then expressing an interest to discuss it with a sales person. Making that process as dynamic and efficient as possible is the core role of marketing.

Investing in this capability, whether it is in-house or contracted, or a mix of both, can deliver returns.

A recently released study of 1400 companies and 15,000 employees from global business consultants McKinsey provided evidence of how advanced marketing and sales capabilities deliver competitive advantage. In their study companies with the best capabilities tended to outperform their competitors by 30 per cent.

The study’s authors compared the growing focus on marketing and sales capability to the ‘lean’ focus of the last decade, where manufacturers especially made huge gains by removing waste from their production processes.

Similar efficiencies can be achieved in marketing and sales capability, argue McKinsey. They found the best performing firms in their research have a strong understanding of their marketing and sales capability.

That means they understand what kind of capabilities (i.e. product development vs pricing strategy vs lead generation) they specifically need in their industry and given their level of maturity, how strong they are in those different areas, and how to improve the most important capabilities.

What characterised top performers in the study was viewing marketing and sales as an investment, not an expense. They found investing in the right marketing and sales capabilities could yield as much as five or ten times that of an investment in assets like factory equipment.

What the study really points to is that marketing isn’t about using science to trick our brains into buying stuff. It’s that effective marketing should be about taking a scientific approach to profitably meeting the needs of customers.

 

If you would like to learn more ways to market your tech product or service effectively, download 7 attributes of tech marketing success.

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