Ralph E. Grabowski - marketingVP - fact-gathering, analytical Marketing to steer the enterprise

 

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Who Is Going To Buy The Darn Thing?
 

Who Is Going To Buy The Darn Thing?
Invest More In Marketing Than In Engineering To Find Out!

Institute of Electrical and Electronic Engineers (IEEE)
Proceedings of the IEEE Electro International
By Ralph E. Grabowski

 
Table of Contents

   Abstract
1 The evidence is in
2 Who needs Marketing?
3 Exactly how much is "more" Marketing?
4 Avoid the pitfalls of the flaming failures
5 Do what the super successes do
6 Go for it!
7 Implications for technology-based enterprises
8 Summary
9 References
   Figures
   About the author

   PDF reprint -  28 pages, 0.7 MB
   PDF 2-page abstract with summary of the data - 0.3 MB

 

invest more in market research than in engineering
  2 - Who needs Marketing?
The product's not ready yet.
 

"Sinking Machines ... Lack of Market Vision Blamed in Fall," blared the 1994 Boston Globe(3) headline announcing the Chapter 11 bankruptcy of Thinking Machines as they blew through $120 million in capital and began laying off 200.

GCA of Andover, MA shut their doors in 1993 after peaking at 3,000 employees and over $400 million in annual revenue.(4)

Becton Dickinson Medical Systems put $300K into engineering in the 1970s, receiving five US Patents, before discovering they had developed a technology for which there was no need.(5)  Nobody would buy the darn thing!(6)

On the success side, Stanley Lapidus raised $43.6 million to launch his new venture, Cytyc; becoming one of the largest VC financed startups of that period.(7)  Cytyc's Wall Street Journal tombstone proudly broadcasted news of $8 million raised in their second round alone.(8)  These highly visible successes and failures are all around us.  Why?  What is the process that leads to successful new products and enterprises, and what process leads to failure?

In his IEEE WESCON paper, Albert Ehrenfried discusses new product development process;

"Within technical industry, few matters receive as intensive effort as the continual improvement of existing products and the development of new products.  Many managers of technical firms are serious engineers, and one of the most absorbing and challenging parts of their job is to conceive and guide the engineering of new and improved products for the future.

"But, despite the dollar expenditure and engineering skill that goes into the development of new products, the incidence of their failure is shockingly high.

"Too many products are developed to satisfy the desires, urges, and hunches of people within the company, rather than to meet the specific needs of the market external to the company.  Products grow out of the desire to tinker, or because an engineer sees a purely technical challenge.

"Recently, studies have been made to determine the fate of products that have been brought lovingly into existence, fully developed, mass-produced, and finally presented to the unsuspecting customer.  By actual count [quoting a study by the New England Council of Boston], new products put on the market by 200 leading companies showed a tremendously high 80% rate of failure.

"Putting new products on the market has thus become one of the biggest gambles in the business world ... This is a day of tight competition, growing markets, and the need to shift from government research to commercial products.

"The excessively high rate of failure of new products is not due principally to lack of good engineering, insufficient investment capital, or lack of sales promotion.  Products usually fail because there is insufficient demand for them."(9)

Mr. Ehrenfried is pointing to the question: "Who is going to buy the darn thing?"

Albert Ehrenfried wrote his IEEE WESCON paper in 1955, more than fifty years ago.  It could have been written today, especially with current military downsizing.  The New England Council's failure rate study, which he quoted, was published in 1953, over a half a century ago.(10)  It could have been a current survey.

There is a recurrent theme across the decades; the theme of the relationship between marketing and successful new product development process.  In the 1950s Albert Ehrenfried wrote of the "challenge ... to guide the engineering of new products."  Observing the 1970s and 1980s, Pierre Lamond, a veteran of National Semiconductor, proclaimed in 1986, "In the 1970s, it was technological innovation.  Now it's marketing.  What's important is which features you choose to put in your chips, not which ones you're capable of putting there."(11)

This author believes that technology alone never worked as a strategy for sustainable commercial success.  Figure 1 contains consistent data from seven different decades; from the 1940s, the 1950s, the 1960s, the 1970s, the 1980s, the 1990s, and from the 1990s.

It is possible that the importance of marketing may have masked in the 1940s and 1950s by the limitations of the day, such as vacuum tubes; engineers had difficulty making much of anything work.  Lack of marketing may have been camouflaged through the 1960s by the needs of the military and the space program.  In isolated cases in the 1970s, technology alone may have been sufficient (barely) for a temporary (not sustainable) advantage.

In the 1990s, as it always was, marketing is paramount.  MacRae Ross writes in his 1991 paper, "Seventeen Deadly Marketing Mistakes,"(12)

  • "Deadly Marketing Mistake Number 1,
    Thinking that technology sells itself.

  • "Deadly Marketing Mistake Number 9,
    Not being a marketing driven business from the top down."

Michael Nevins frames the management challenge in his 1984 article, "Marketing Excellence Takes a Total Commitment."  He writes, "In electronics, as in other industries, it has become increasingly difficult to succeed with a strategy based on technological leadership ... marketing becomes all important.  Electronic companies' managing the transition from being technology and engineering-driven to being marketing-focused is the number-one issue in industry today."(13)

If more marketing is so important, how do we make it happen?  

Engineers know how to achieve an engineering challenge; sizing the engineering budget and staffing.  How do we size and staff the marketing challenge?  

Exactly how much is "more" marketing?

 

 
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