Defining the Scope of Software Marketing

Defining the Scope of Software Marketing

Before we start looking into software marketing specific considerations, it’s critical to define the scope of software marketing and marketing in general as a first step. We’ve discussed the value of marketing in the previous article, so by now, I suppose you’re convinced that marketing, especially marketing for high-tech products such as software is crucial for any business, even on its early stages. Finance, operations, accounting, other business functions, as well as the software development itself as we saw in the previous article won’t matter without sufficient demand for products and services so the firm can make a profit. It’s essential to have a common understanding of what is meant by the term marketing and the broad scope of activities that marketing encompasses.

Marketing is about identifying and meeting human and social needs. One of the shortest best definitions of marketing is “meeting needs profitably.” When Yelp recognized that people needed an easy way to access information about local restaurants and see other people's suggestions, it created an easy to use app; Uber did the same for riders and drivers alike; Spotify for music listeners and song authors; Amazon for shoppers and sellers; Oracle for enterprises; the list goes on and on. These firms demonstrated marketing savvy and turned a private or social need into a profitable business opportunity.

Marketing affects society. It shapes, eases and enriches our lives by researching our needs and implicit wants and satisfying those needs and wants by introducing new or enhanced products. Top management recognizes that marketing builds strong brands and a loyal customer base, intangible assets that affect the value of a firm. Many companies now have a chief marketing officer (CMO) to put marketing on an equal footing with other C-level ­executives such as the chief financial officer (CFO) or chief information ­officer (CIO).

The American Marketing Association gives the following formal definition:

"Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."

An essential point here: marketing is always a set of exchange processes. What’s exchanged is another topic which we’ll cover later, but for now, let’s take it for granted: it’s not always product/service exchanged for money. Depending on the company's goals, it’s current stage and the market state, the marketing request/response (in software development terms) could be something else than just money. Many software companies put money as a secondary goal, moving some other metrics to the first place like “number of nights booked” for Airbnb, “total time spend reading” for Medium, or “monthly active users” for Facebook. These companies know that if they grow those metrics, revenues will catch up. Facebook, for example, provides much value to millions of its users, while it doesn’t ask users for money directly. It asks for their time on the platform, because Facebook knows it can sell this time for money to advertisers later on. Google Analytics, MailChimp, Dropbox to name a few, offer free plans even for businesses. All they ask for is integration into business processes, because they know, once their software in, they have higher chances to monetize once a business scales, just because once software is integrated into a business model and stakeholders are quite happy with it, it’s harder to switch even given a superior alternative around the corner.

Dealing with these exchange processes calls for a considerable amount of work and skill. Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. Thus, marketing management is all about identifying core needs, choosing target markets and segments and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

At its heart, marketing is a philosophy of doing business that reflects the importance of creating value for customers by solving meaningful problems. This philosophy relies on consumer- and market-based info to guide internal decisions making and to resolve internal uncertainty and conflicts. Marketing is not something that is done after developers released a new version of their product. Among other things, a well-developed marketing competency includes proactive consideration of the customer in the development process. It helps guide software development roadmaps and plans; determine appropriate market segments and buying/user personas for them; establish cost targets to meet pricing objectives, and identify partners that will play a critical role in the value delivery process. Some examples: Amazon partners with DHL, because delivery is a crucial part of the entire buying experience; Atlassian with all its integrators and consulting partners). In other words, marketing brings the voice of the consumers into the firm.

The Scope of Marketing Activities

We can distinguish three levels that encompass the scope and types of marketing activities and decisions: Strategic, Functional, and Tactical.

Strategic: Proactive decisions to guide company’s efforts in the marketplace, including the best opportunities in the market and how to best develop and position the company’s product(s). On this marketing level the following typical questions are answered: In which market will we compete?; Which segments will we target?; What value will we offer customers in our target segment? What will our competitive position in the marketplace be (relative to the established offerings)?

Functional: Focus on marketing as a functional area of responsibility, specifically including the product/technology development function. On this level the following typical questions are answered: What will our decisions be regarding the product, price, place, and promotion (the “4 P’s of marketing”)?; How will personnel in different departments (marketing, research, operations, support and customer service, product development teams, and other) interact to make marketing decisions?

Tactical: Development and implementation of various marketing tools, executed consistently with Strategic and Functional decisions: What do we put on our website? When and how do we run surveys? Which conferences or trade shows should we attend? What type of content do we produce and what is the best cadence should be? At what social media should we be present?

Despite the need for strategic direction, many software firms, large and small, do not proactively set the strategy or review it timely. When a company lacks direction, its efforts are diffused across multiple market segments, product development projects, and marketing tactics. Although a company may think this scattered approach hedges its bets in the marketplace, it’s typically a recipe for disaster. Because of the lack of focus, the company never truly understands customers’ needs in any single segment; as a result, it is less likely to succeed than a company that has proactively defined a clear strategic direction. I have heard many times the answer to a simple question “Why do we do that?”: “Because we can,” or “We never know what is going to work.” While the first answer is very inspiring and the second is true to some extent, blindly doing something without a strategic plan, proper metrics to measure the success of your actions has never worked well in the long term.

It’s also crucial to note that all three levels, including Strategic, apply on various levels of granularity, there always should be a company strategy, but there should be a specific strategy for a particular product and service that corresponds with the company strategy. One can go even further defining a strategy for some particular teams within a project. It’s up to you to determine the needed level of granularity. Also, an increasingly important aspect of a winning marketing strategy is a corporate social responsibility, through which a company’s strategies explicitly address social and global problems, to provide not only economic profits but social benefits as well.

On the Functional level of marketing activities, everything revolves around what’s traditionally known as the marketing mix, or the “4 P’s of marketing”: product, price, promotion, and place. The critical management issue in the marketing mix is ensuring consistency in all decisions that support the product’s position in the marketplace. For example, a software product or service positioned as high quality/premium must be in fact high quality, have the price that conveys that image, high-end partners that provide appropriate levels of support and service, and advertising messages that communicate the premium image. The responsibility for these diverse marketing functions is scattered across many units in most organizations. Sometimes product development teams are charged with research-and-development activities. Sometimes they are also charged with other marketing activities such as collecting market research, conducting market segmentation, or targeting and positioning activities. After product development, the responsibility for product launch may be passed to product managers, who coordinate sales and marcom (marketing communications). Product managers may also perform some other marketing activities noted above. Sometimes product management is part of a development team. So as you can see, first, company structure may vary, second, marketing is never a one-person or one-department task. Marketing touches every part of the organization, or at least it should for a company or a project to be successful.

Unfortunately, many firms have siloed marketing departments, which are responsible for all marketing, and at the same time are not integrated well enough into other company’s departments. Even with a formal marketing function, in many software firms, the input of the marketing personnel is sometimes neither solicited nor (if solicited) respected/valued by people in other functional areas. Here’s a joke, which can reflect a common stereotype:

Q: What is marketing?
A: What you do when your products aren’t selling themselves.

This joke implies that marketing is not something that companies should have to bother about unless the product is not good enough to “sell itself.” When marketing is viewed as a philosophy of doing business, the focus is less on which “function” performs a specific marketing task and more on how every person and department in the company works together to provide value to the customer. A software company that effectively coordinates its efforts across functional units to deliver superior customer value is more likely to be successful than firms that make decisions independently within each functional area. When individual departments have their own independent goals, that can lead to conflicts, incompatibility and ultimately to a lost customer focus.

Here’s another consideration: many people sometimes think of marketing as “the art of selling products,” however many are surprised when they discover that selling is not the only and not the most important part of marketing. Selling is only the tip of the marketing iceberg. Peter Drucker, the famed management theorist, put it this way:

“There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.”

This statement underlines an integral part of the marketing function within a company, and that marketing is not something performed by a single person or a department. It’s always a team effort.

What is marketed?

You might be surprised, but products and services are not the only items that are marketed. Marketers market ten main types of entities: goods, services, events, experiences, persons, places, properties, organizations, information, and ideas. While you might think this is superfluous in the context of software marketing, I think it’s important to understand the broader scope of marketing and what software marketing focuses on within the broader scope. Let’s briefly explore these types of marketed entities and then see which of them are important for us as software marketers:

Goods: Physical or electronic goods constitute the bulk of most countries’ production and marketing efforts. For software products, there are still a bunch of companies that sell standalone versions of their products with licenses. Think about Microsoft Office or Photoshop.

Services: As economies advance, a growing proportion of their activities focuses on the production of services. In the software development industry, we can see more and more SaaS (Software as a Service) projects emerging. The current trend is moving standalone versions of software into the cloud, so eventually, all software products may become SaaS. SaaS model changes the way marketing assembles the marketing mix (product, place, price, promotion). Think about Microsoft Office 365 / Google Drive vs traditional Microsoft Office.

Experiences: By orchestrating several services and goods, a firm can create, stage, and market experiences. We often forget that all that matter for a customer is the overall experience with a product or a firm. Even if you have a superior software product but weak documentation, tech support, or lack of a vibrant community around the product, then the overall experience might be seriously flawed. So having products and services to sell, you might want to end up marketing the experience people get using them.

Software is often just a part of the end product and is not marketed directly. Think about Apple’s products and services. They make a lot of software products and services as well as excellent hardware. They don’t sell software and hardware separately. What marketed by Apple is the experience people get once they join the Apple ecosystem, whether they buy an iPhone, Mac, or Apple Watch. Excellent hardware, excellent software, the excellent app store with an incredible set of apps (physicals stores also worth mentioning as they're an essential part of the overall experience), vibrant community around the ecosystem, worldwide support and… you are all set if you own an Apple product.

Events: Marketers promote time-based events, such as major trade shows, artistic performances, and company anniversaries. That relates to marketing experiences which we highlighted above. Speaking about marketing for software products and services: companies market their offerings by organizing and sponsoring various events, meetups, and conferences where people can meet, get guidance and participate in workshops, which ultimately improves their experience with a company, a product or a service. Think about Oracle organizing Oracle Open World or Google organizing Google I/O.

Persons: Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals often get help from marketers. I think this type of entity isn’t relevant for us as software marketers unless you’re trying to promote someone in the industry.

Places: Cities, states, regions, and whole nations compete to attract tourists, residents, factories, and company headquarters.

Properties: Properties are intangible rights of ownership to either real property (real estate) or financial items such as stocks and bonds. They are bought and sold, and these exchanges require marketing. Software is built from source code which is qualified as intellectual property, so once you sell your code (for example selling a project to another company), you might require marketing.

Organizations: Museums, performing arts organizations, corporations, and nonprofits all use marketing to boost their public images and compete for audiences and funds. We’ll get back to product vs company positioning in future articles, so touching it here just briefly: companies usually employ either multi-brand strategy, where the name and image of a company behind a product doesn’t matter a lot or a mono-brand strategy, where the company brand is much more important than the image of its particular products. It’s important to keep this in mind when marketing your company and its products.

Information: Information is essentially what books, schools, or online courses produce, market, and distribute at a price to students, and communities. Content marketing is one of the most powerful marketing tools at the moment. With content marketing what you as marketer produce and market is information. So your goal here would be to get people to read/watch your content where there’s no monetary price, but potential sales after people consume your content. Some companies may sell content as a supplement for their or someone's else software products.

Ideas: Every market offering includes a basic idea. Charles Revson of Revlon once observed: “In the factory we make cosmetics; in the drugstore we sell hope.” Software products and services, like any other more traditional offerings, are platforms for delivering some ideas or benefits.

I hope after reading this article you now better understand what marketing is all about and what it is not; what is marketing as an organizational function; what is the scope of marketing and software marketing in particular; and what’s generally marketed and how these marketing concepts apply to the software industry.

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