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International Marketing

A little background….
Senior Project Consultant at
Håndværksrådet International A/S and
Euro Info Centre Viborg
Member of European Commission
Working Group for Information Society
and e-business for 5 years
Business and Export background
No formal IT training.
International Marketing

Managed and / worked on EU projects:


e-business law database
Danish national campaign on e-business
Internet awareness raising
Online guides x 3
Agricultural portal x 2
E-business training in Bolivia, Estonia, Greece,
Hungary, Latvia, Lithuania, Slovenia, Spain
Practical Matters

Programme:
Tuesday - International Marketing for ICT
14.00 Danish business example
Wednesday - Role of the consultant
Afternoon - short session: Travel for business meetings Europe
Thursday morning - Branding
Thursday afternoon - 14.00 CMMI
Saturday - Kristiina Sunell
Sunday - Kristiina Sunell

Remember: Assignment III given on Thursday


International Marketing

Definition:

“Marketing is the art of talking


nonsense filled with meaningless
Americanisms with a smile on your
face”

Anon
International Marketing

Definition:

“Marketing is a management process,


responsible for identifying, anticipating
and satisfying customer requirements
profitably”

UK Chartered Institute of Marketing


International Marketing

Based on Maslow’s Theory includes:


• Marketing starts with human needs and wants.
• Human need is a state of deprivation of basic
satisfaction
• Human wants are desires for specific satisfiers of
needs
• Human demands are wants for specific products that
are backed by an ability and willingness to pay for
them
• Marketing does not create needs – Needs pre-exist
markets
International Marketing

Difference between Sales and Marketing:


Selling focuses on the needs of the seller,
marketing on the wants of the buyer. Selling
is preoccupied with the seller’s need to
convert his product into cash; marketing with
the idea of satisfying the needs of the
customer by means of the product and the
whole cluster of things associated with
creating, delivering and finally consuming it.
International Marketing

Marketing concept rests on 4 pillars

• Target market
• Customer needs
• Integrated marketing
• Profitability
International Marketing

Definition: Markets
Markets can be:
• Needs based (e.g. dieters)
• Product based (e.g. shoes)
• Demographic based (e.g. Youth market)
• Geographical (e.g. France)
• Can also cover non-customer groups such as
Voter markets, labour markets etc.
International Marketing

Definition: Needs
• Stated needs (I want an inexpensive car)
• Real needs (I want a car which is cheap to
run)
• Unstated needs (I expect good service from
the dealer)
• Delight needs (I buy the car and get air
conditioning added free)
• Secret needs (I want my friends to see me as
environmentally conscious)
International Marketing

Profitability
Most companies don’t market unless:
• Sales decline
• Slow growth
• Changing buying patterns
• Increased competition
• Increased market expenditure
International Marketing

Groupwork: What needs can I find for my


company’s products / services?
International Marketing

ICT Marketing is highly complex

• The sector is dependent on in-house


technical acronyms which make marketing
and understanding a nightmare
• Marketing of invisible features, future
unproven needs combined with negative
emotions.
International Marketing
International Marketing

• Need for tech-heads to understand the


technologies involved
• Need for creative types to understand
the future applications possible with
technologies
• Need for ICT specialists to be rational
enough to understand the difference
between functional knowledge and
technical knowledge
International Marketing
Offer-centric Demand-centric

Product centred Market needs

Reactive product Predictive product


development development
Cost led pricing Market pricing

Opportunistic sales Targeted sales

Scattered customer Customer clusters


base
International Marketing

Should ICT marketing be offering-centric


(Market led) or demand-centric (Demand led)
or should it focus on desire instead?

Most people take it for granted that when a


product/service is useful, it should sell in
large quantities. All you need to do
– according to them – is measure the needs
of your potential customers
International Marketing

Offer-centric:
• Selling at people, not to people
• Most common type in ICT marketing
• Innovation is keyword – no alternative, no
history, no market research available
• Can be only option for most new software as
demand does not exist
International Marketing

Demand-centric

• Starting point is target population - a sample is taken


of that population, interviewed, deduce and products
are made or adapted according to results.
• Demand-centric forces product/service managers to
think about clients first
• Prevents too many far-fetched unrealistic products
and brings realism into R&D
• Alleviates risk by adapting proven successful
products or services where there is a demand.
International Marketing

Demand-centric

However, there are also a number of danger areas:

• Innovative concept products are not always


understood by target group
• Market research often based on small groups and
expensive
• For many products in ICT sector, too many variables
to give accurate results: pay-per-use, by the minute,
by the hour, packaged use-as-much-as-you-like
prices, combined packaged and usage-based prices
etc
International Marketing

Desire-centric
• Assumes non-rational decision making:
• More creative, more sophisticated and more
reliant on sociology than on accountancy
• More geared to B2C market than B2B but
considerable overlaps exist
• Not suitable to government/official tendering
International Marketing

Alternative is ”Reverse-Engineering” marketing


• Designing products or services based on customer
feedback
• Based on theory that it must be easier to improve
something that people know about, rather than ask
them to specify what they ignore or even fail to
understand
• Reverse-engineering marketing is combination of
demand-centric and offer-centric marketing.
• Reverse-engineering marketing favours real-life
product/service testing as well as community-work
with one’s clients in order to improve one’s products
until customer satisfaction is fulfilled.
International Marketing

Examples of ”Reverse-Engineering” marketing

• Most shareware is based on this principle


• Globally Microsoft has beta-testing for 30
days on software with right to use afterwards
• Corel/Jasc Paintshoppro – cheaper
alternative to Photoshop, tested and
upgraded by users.
International Marketing
Internal factors PEST

SWOT
Market Selection

Four P’s Marketing Plan Action Plan


International Marketing

Marketing plan/strategy development


Following testing, marketing strategy
consists of 3 parts:
Part 1: Target market size, structure and
behaviour; planned product positioning;
and sales, market share and profit
goals in the first year.
International Marketing

Example 1:
Target market for instant breakfast drink is families
with children who are receptive to a new convenient,
nutritious and inexpensive form of breakfast. The
company’s brand will be positioned at the higher-
price, higher-quality end of the instant breakfast drink
category. The company will aim initially to sell
500.000 cases or 10% of the market with a loss in
the first year not exceeding $1,3 million. The second
year will aim for 700.000 cases or 14% of the market
with a planned profit of $ 2,2 million.
International Marketing

Marketing strategy development


Part 2:
Outlines the products planned price,
distribution strategy and marketing
budget for the first year (s)
International Marketing

Example 2:
The product will be offered in three flavours in
packets of 6 to a box for retail price $2,49. 48 boxes
to a case and case price to distributors is $ 24. For
the first two months, dealers will get 1 free case for
every 4 bought, plus advertising allowance. Free
samples given door to door and discount coupons
given in newspapers. Sales promotion budget is $
2,9 million and advertising budget is $ 6 million split
50/50 between national and local. Two thirds into TV
and one third into newspapers. Advertising will
emphasize nutrition and convenience. $100.000 will
be spent in year 1 on market research to audit stores
and consumer panels.
International Marketing

Marketing strategy development


Part 3:
Describes the long run sales and profit
goals and marketing mix strategy over
time
International Marketing

Example 3:
The company intends to win a 25% market share and
realise a post tax return on investments of 12%. To
achieve this, product quality will start high and be
improved over time through technical research. Price
will initially be set at a high level and reduced
gradually to expand the market and meet
competition. Total promotion budget will be boosted
each year by 20% with initial advertising/promotion
split 65:35 moving to 50:50 slowly. Market research
reduced to $60.000 after year 1
International Marketing

Groupwork:
Make a case suggestion for one
company from your work group
International Marketing

Marketing strategy development in introductory


stages:

• Rapid Skimming strategy (High Price/High


Promotion)
• Slow Skimming strategy (High Price/Low
Promotion)
• Rapid Penetration strategy (Low Price/High
Promotion)
• Slow Penetration strategy (Low Price/Low
Promotion)
International Marketing

ICT Marketing strategy


• Tendency for mix of B2B and B2C
products and increasing cross-over
• More standardisation in workplace and
higher degree of professional
equipment in home market
International Marketing

Segmentation of ICT Markets

• B2C (Business to Consumer) ICT products marketing


• Most popular type of ICT marketing and inevitably draws on
standard consumer marketing techniques.
• New technology and hi-tech products are increasingly
successful with general public and ICT consumer marketing is
naturally closer to marketing of household appliances - mainly
sound and video systems
• Traditional products such as computers, PDA’s etc. and sound
and video products are now merged into hybrid devices which
combine high-end multimedia with IT to produce increasingly
sophisticated systems
International Marketing

Segmentation of ICT Markets


B2B (Business to Business)

Aimed at professional buyers


Big difference between Corporate and SME / SOHO B2B marketing
Corporate
• Large corporations except for government bodies, are nearly all
are international;
• Require face-to-face, personalised contact over a long-term
period. Selling to large corporate accounts mobilises large
account-teams, which can amount to dozens of dedicated
professionals in certain cases (sales, business consult
engineers, and delivery).
• Investment in sales resources is justified by potential revenue
International Marketing

Segmentation of ICT Markets


B2B (Business to Business)
SMEs
• SME’s are more varied in shape or form and are
more difficult to describe with large differences in
size, number of employees, revenue, international
presence, ownership
• Selling to SME’s can vary between consumer
(SOHO) and corporate marketing
• The smaller the target customers, the more ICT
marketing techniques and know-how will be
necessary to maximize the hit-rate/contact-cost ratio
International Marketing

Segmentation of ICT Markets


International Marketing
International Marketing

Segmentation of ICT Markets


B2C2B (Business to Consumer to Business)
Change in marketing power?
• INTEL stickers on PCs influence
manufacturers making industrial purchasing
choices
• INTEL, also subsidises PC manufacturers’
advertising campaigns therefore putting even
more pressure on them so that they promote
INTEL chips
International Marketing

Segmentation of ICT Markets


C2B (consumer to business)

“The most important activity in e-commerce isn’t


selling. It’s buying. Quite often that doesn’t mean
buying online but checking, comparing, analysing
quality and price before buying in traditional stores or
services”
Italian researcher Giancarlo Livraghi
International Marketing
Business to Business software solutions

Local distributor OEM


Agents

VAR and /or


SI
Own direct sales

Understand: End user

Your product
Channel opportunity
Existing channel structure in each region
Channel agent
International Marketing

Channel choice is also related to the sales cycle of the


product:

Longer sales cycles usually require more direct methods

Product related factors which stretch the cycle include


• High price
• Immature technology
• Complicated whole product
• Big organisational impact
International Marketing

Questions:
Where do our competitors earn money?
Where are the complementing products sold?
Is there a need to support the channel and the customer
simultaneously?
What is the support call response time requirement?
Do we need to establish a local office?
Who are the channel members?
International Marketing

Innovation Project Management


• Businesses are getting more and more
familiar with project management or basic
tasks scheduling
• Emergence of complex innovation projects
• On time delivery of projects becomes
increasingly demanding
• In the automotive industry, new products are
on average typically 18 months behind
schedule (ILM 2003)
International Marketing

Innovation Project Management

• ICT is being introduced massively in all types of


industrial and commodity products to match
overwhelming demand for more, better, newer
functionality.
• Endless piling up of layer upon layer of electronics
and software which makes major projects very
complex
• Security issues
• Managing projects is a matter of managing people,
not figures
International Marketing

Orbital project management method is best


practice for handling complexity.
It enables projects to get started more
quickly, more efficiently and improves project
success rates:
Proactive problem solving helps tackling
issues even before they crop-up, i.e. before
it’s too late and before they generate a band-
wagon effect on the overall project-schedule.
Often referred to this way of handling projects
as managing projects through Murphy’s Law.
Downside – can be seen as negative
International Marketing
International Marketing

Project management principles issued


from the world of manufacturing
industries also apply to ICT innovation
projects, despite specific arrangements
and adaptation to the size of the
project.
International Marketing
International Marketing
International Marketing

One reminder: Stop believing that just


because a product/service is superior by
design, success is inevitable
Media coverage does not mean a thing
either, despite appearances.
Apple Computer, the one company that tried
hardest to make products that were easy to
use, understandable, with sophisticated
aesthetics driving both graphical design on
the screen and industrial design of the
products, failed due to poor marketing
International Marketing

Traditional product cycle


International Marketing

Cyclical product cycle


International Marketing

Innovation product cycle


International Marketing

PC hardware / software markets are renewed


due to obsolescence not due to fatigue
Alternatively, new functionality has been
implemented - multimedia online usage, or
DVD-COM burning, new flat screens, which
increases social pressure
When PC penetration gets anywhere close to
that of refrigerators (i.e. 99%, and 90% from
1975), they will probably still be replaced
faster than refrigerators
International Marketing

Evolution of equipment rates


International Marketing

Crossing the chasm: New Technology


adoption rates
International Marketing

According to Geoffrey Moore, 80% of ICT products and


services don’t cross the chasm

• Ideal “life cycle” cut in half


• First come ‘techno-enthusiasts’, who are ready to buy any type
of new technology as long as the prestige it gives is high and
visible. Price for them is not a valid criterion, in fact the other
way around
• The more expensive, the more exclusive, the more desirable.
E.g. buying expensive €30,000 plasma TV screens was highly
valuable for those who wanted to be the first to try flat TV
screens and show them off to their friends
International Marketing

Early adopters’ come next. Early adopters are ahead of


markets and they have a good feel for technologies, which are
meant to become mainstream one day. Tend to be more
realistic than ‘techno-enthusiasts’. They know they have to wait
for a technology to catch up, until its price becomes reasonable
- even though it’s still too high.

The third category of users (right after the so called chasm) is


made of ‘early pragmatists’ who will only start buying new
technology when they are certain that it will become
mainstream. Pragmatists tend to discard gadgets and they
have a tendency to buy that technology which brings real
solutions to their problems.
International Marketing

Finally, conservatives and laggards only come into the market


when everybody else has, and they are those who really make
markets mainstream or not.

Laggards tend to yield to peer-pressure when it really is


inevitable and when not belonging a certain object/product
really becomes too much to bear. One should be aware that -
according to time and circumstances - each of us could be
found in any of the above categories of technology users. One
may very well be an early adopter of home-cinema and a
laggard for computers or vice versa.
International Marketing
France Telecom report on household
appliances 2003
International Marketing

Gartner report 2004 on ICT storage market


showing cycle times
International Marketing

Life cycle of software

• Software evolves all the time with


patches, upgrades etc
• Ca. 70% of software cost is
maintenance
• Overwhelming majority of software is
sold based on licence – recurring sales
International Marketing

Software cost structure


International Marketing

Magic quadrant Robert Metcalfe


Large network access must be made before short term
revenues can be targeted.
Marketing of network-centric products/services almost
always involves an extensive investment phase
dedicated to very costly infrastructure unless Internet is
used.
Pervasive access to the Internet is what it makes it
successful for building new networked applications
Despite poor security enforcement, the Internet is so
successful because of this very pervasiveness and
ubiquity.
International Marketing

Magic quadrant Robert Metcalfe


International Marketing

Example: Mintel
Highly secure, but less accessible services will – most of the time –
be more successful than highly secure, hardly accessible services.
In other words, first comes access, then usage and lastly, security
is enforced to preserve usage. The well-spread belief that security
and protection are drivers to system usage is, in my mind, a bad
idea. Looking at what happened in France in the 1980’s with the
roll-out of the Minitel system is tale-telling. At that time, France
Telecom was still a government-owned PTT and not the modern
privatised service-provider we know today. FT decided back then to
equip each and every household with a free Minitel terminal. The
extraordinary life span (20 years) of this service made it an amazing
cash-cow for the telecom operator generating humongous revenues
[81].
International Marketing

Ansoff’s matrix

Penetration Product
diversification

Market Diversification
expansion
International Marketing

Group work:
Turning B2B leads into real sales