Why do some innovations dominate the market while others collect dust? Why do we feel that we can’t live without products that aren’t essential, yet place little value on those that are?
Hint: It’s not the quality of the product or service.
It’s marketing and pricing. Marketing is how we create desire, effective pricing strengthens that desire. Here are some examples of how the marketing-pricing relationship creates synergy.
Once considered the world’s premier software firm, Microsoft actually has some of the poorest products on the market. Talk to anyone about Microsoft and odds are that they’ll regale you with stories of system crashes, late deliveries, promised ‘fixes’ and daily frustrations with their Windows operating system.
A recent article in The Verge, HP brings back Windows 7 ‘by popular demand,’ indicates that Microsoft’s problems continue. With that history, we can’t help but wonder ‘How did Microsoft come to dominate the market?’ They were great marketers.
Microsoft targeted a large market, the business community. It’s the field in which the vast majority of us work. They used our familiarity with their products to extend their reach into our homes. To support that mass market approach, Microsoft priced its products to make them affordable to the markets they served.
Finally, Microsoft’s leaders understood our natural reluctance to change and used it to their advantage. They knew that once we had learned to use their products, we weren’t likely to go through another learning curve. Our reluctance to change, combined with an affordable price, caused us to tolerate problems instead of searching for alternatives.
Apple, Intel and HP
There’s no doubt that, over the years, these three companies have created superior products. Apple in an array of ‘iproducts,’ Intel with its microprocessors and HP in its printer division.
Superior design and great showmanship created the furor over Apple’s products which continues today despite serious challenges by Samsung. Would the design alone have accomplished that? I doubt it.
Would Intel have enjoyed the success it did without the ‘Intel Inside’ marketing campaign? If HP hadn’t gotten the word out about the superiority of their printers, would they have enjoyed the premium prices they did? Unlikely.
In addition to great marketing campaigns these companies placed premium prices on their offerings to solidify the perception of superior quality. Indeed, Apple has not lowered its prices even when competing offerings had entered the market – a rare, bold approach to pricing.
Living in St. Louis, I’ve come to know quite a few people from AB. Without exception they say “AB isn’t a great beer company, it’s a great marketing organization.” Until the advent of the microbrewery, few beer companies captured the hearts of beer drinkers like AB did.
It’s ‘King of Beers’ ad campaigns and premium pricing combined to assure the buying public of the superior quality of its beers even though choosing a favorite beer is a matter of personal taste.
Innovation is not the path to market domination, marketing and pricing are. Innovators often experience the joy of creation and the frustration of futility. Conversely, great marketers can dominate the market with inferior offerings.
If you’re organization is great at innovation, but lacking in marketing capability, align yourself with a great distribution firm and you’ll both enjoy great success. If your goal is to build a highly-innovative organization, devote as many resources to marketing your innovations as you do in creating them. Otherwise you’ll find your innovations collecting dust when they should be dominating the market.