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Love Your Inner Marketer

Marketing Machine | Love Your Inner Marketer (Web Techniques, Mar 2000)

Marketers and developers often mix like oil and water. Marketers live in the world of perception, while developers live in the world of verifiable truth. If you're a developer like me, you make jokes about marketers: They're always trying to "spin" things, while we argue, "If it doesn't work, just say so." But we need marketers desperately. Without them, that great product will just die on the vine.

What do marketers do? They choose a market, identify product features and pricing that can satisfy both customers and buyers, analyze competitive offerings, work with developers to build superior products, inform prospects about the availability of those products, gather feedback from customers to improve the product, and fold that feedback into feature requirements for the next release.

Sound easy? It isn't. Let me be a nerd for a moment: Statisticians like me view each of these marketing tasks as a big, complex, continuous, multivariate optimization problem, where many of the variables are unknown. We don't have solutions for these problems. So marketers rely on suboptimal statistical tools, their pattern-matching brains, gut feelings, and the seats of their pants. There's a lot of instinct in marketing, but that doesn't make it easy. And let's face it: The marketing instincts of many statisticians could use a little help.

"Marketing Machine" is a column about marketing and the Internet. Efficient communication gives rise to new forms of marketing: affiliate marketing, viral marketing, one-click buying, and so on. Future columns will explore these marketing forms in detail, as well as Internet marketing for software products. In this first installment of "Marketing Machine," I hope to give you an appreciation for the marketing process. I'll provide examples showing how the actions you take as a developer can help market your product. This will help you build better products that meet more of society's needs, attract stronger demand, and ultimately generate a higher price for your stock options. If you're like me, you might eventually fall in love with marketing, seeing it as a complex dance among buyers, sellers, money, and products.

Learn from Your Mistakes

My appreciation for marketing has been honed by past mistakes. I started Chaco Communications five years ago with four engineer pals, while I was completing a computer science dissertation (I don't recommend this). Everybody told me we needed a marketer. I thought, no problem, we're smart! We can learn marketing—it's easy.

We built a few great little applications: VR Scout was the first VRML viewer to completely implement the VRML 1.0 standard. Pueblo was a MUD client that allowed virtual-world programmers to create 3D environments with music and realtime HTML. Social Server was a Java-based chat system that provided multiuser games and chat combined with simple South Park-style avatars.

We did some marketing: the public relations part. I sat down in a Barnes & Noble bookstore with a laptop and a pile of trade magazines, typing in the address of each editor-in-chief. Then I wrote and mailed out press releases. We got a lot of good press. Somehow, Chaco got listed as one of Upside's 50 hottest startup companies. We were running it out of our homes. We didn't even have an office.

MUD users loved Pueblo and we made money selling VR Scout and a Japanese version of Social Server. We were self-funded, paying our modest salaries solely from revenues. (Yes, you read that correctly.) We tried to get venture capital, but the venture capitalists thought we were idiots because we had no marketers. Meanwhile, several well-marketed VRML companies were plowing through millions in venture capital.

Thoughtful market research would have helped us realize we didn't have a paying customer. It took two years for me and a hot engineering team to realize that VRML was not taking off, and neither the MUD-user market nor the MUD-advertiser market had the millions of dollars required to reward a professional development effort. By this time, we were running on fumes, and had gained a much greater appreciation for marketing.

So, what did we do? We wisely left our beautiful, but marketless love in the ditch. No more chat. No more VRML. We cried. We gnashed our teeth. We combined forces with some pals at Songline Studios, hired a marketing VP, turned into a marketing software company called LikeMinds, and got seed capital from individual investors. One merger led to another with Andromedia, and yet another with Macromedia.

We came out scarred, but successful. Despite all that dilution, my pals and I are doing fine, thank you. Macromedia's stock is public and profitable. Somehow along the way I filed my dissertation. (Like I'm ever going to be a professor!) And we know a lot more about marketing. Watch out for us!

Know Your Customer

Throughout this column, I'll talk about products. If you run a Web portal that generates advertising revenue, do you have a product? Yes. The product is advertising space, and the buyer is the advertiser. Perhaps the greatest danger in Web development is taking your eye off the ball. Know what you are selling, make the people to whom you are selling it very happy, and you will gain a nice profit.

Imagine a company made solely of myopic developers, called All Engineering Corporation. Because good developers want reusable engineering tools and free software, they often assume that's what buyers want. That's the first mistake.

Buyers want solutions to their hairy, complex, and often industry-specific problems. They will often pay lots of money if you can solve those problems. Sometimes those customers are other engineers, and so you see successes like Sun or Intel. But most of the time, buyers are not engineers. They don't want a completely programmable, flexible application (most don't know how to program, and hiring programmers is expensive). They want someone or something to make their lives easier, more efficient, or more fun.

The second mistake many engineers (and some marketers) make is trying to design one application for a market with many different types of customers. Usually this happens when they haven't studied the complexities of the market they're trying to satisfy. Trying to satisfy too many types of customers generate way too many product requirements. For example, the requirements of a general financial Web site are far more complex than the requirements of a Web-based accounting system for small dentist offices.

If you're considering creating a new product for an untested market, find a variety of buyers in that market and ask them what they need from your product. If each person gives a different list of requirements, or uses different language to express the same concepts, it's likely that your market is too broad. However, if everyone you talk to needs the same thing, and if there are a lot of buyers with deep pockets, you probably have a winner.

Choose a Winnable Market

Choosing an overly broad market makes engineering much harder, but that's just the tip of the iceberg. A company is successful when the product sells enough to pay for the development cost and a decent profit. Selling to an overly broad market makes getting market acceptance of your product much more difficult, it makes selling the product less profitable, and it makes servicing the product more difficult. Why?

Most people don't purchase a new product, even if it promises to solve a plethora of problems. They wait until enough trusted friends or colleagues recommend it before buying. This is where a concept called winner-take-most comes into play: To win a solid market percentage, a minimum number of early adopters—those who will try a product just because it's new—have to buy and like your product, and then encourage conservative buyers to make the purchase. Once your product has obtained a critical mass of happy customers, recommendations explode rapidly and your product ends up owning a sizeable chunk of the market.

It's especially true in markets where buyers share many unmet needs and communicate frequently through personal connections, industry forums, magazines, Web portals, or mailing lists. In these markets, there is a significant first mover advantage: The first company to release and effectively market a product that solves a lot of problems can own most or all of the market.

You can get an early market win by choosing a small market with high communication among buyers and many common needs. This is called vertical marketing. With this approach, engineering is more straightforward because the market has fewer total requirements. Promotion is less expensive because the buyers have fewer magazines, trade shows, Web portals, and other marketing channels that specifically meet their needs. Providing service is easier because you only have to learn the business dialect of a small market.

Define New Markets

Are you intimidated because a big player dominates a market you want to enter? Then the market you're looking at is probably too big. I suggest you pick a submarket and dominate that! Let's look at the dominant product we love to hate, Microsoft Windows. Microsoft "owns" the desktop OS market. If you're like most non-Microsoft programmers, you bemoan this fact and go on using Windows.

But guess who owns the professional graphic-designer desktop? Apple does. My mom is a graphic designer; she owns eight Macintoshes and not one PC. At least once a month she calls to tell me I should own a Mac. My boyfriend is a programmer and digital art photographer; he owns a PC for programming and a Mac for photography. Go ahead and try telling these folks about Apple's retrograde single-tasking operating system. Cool operating systems don't rate with Apple freaks—Mac users are drawn to the system's color matching capabilities and ease-of-use, not to mention the tangerine- and blueberry-colored enclosures. Oh yeah—and it runs Photoshop faster.

It doesn't stop there. IBM dominates "big iron" mainframe operating systems. Palm commands the handheld OS market. Sun owns the high-end Web server market. Many garage startups use Linux. Symbian is a contender for the mobile phone OS market. Microsoft would like to own these markets, but it doesn't. Microsoft can't own everything, which means no matter how tough it looks, your little company has a chance to break into a niche market.

If you're a Web engineer, why should you care about selecting a good market? Because you probably know more about Web technology than your company's marketing team. If you have the right attitude—"I want the company to make a boatload of money," rather than "I want the coolest technology to win"—you can help them make better decisions about markets to enter. If you help the company make more money, it will reward you with a higher stock price.

Meet the Needs of Customers

Nothing kills a bad product like good marketing. If your company finds a vertical market with high communication and desperate unmet needs, and then releases a lousy product and promotes it heavily, guess what happens? Everybody knows you suck! If customers associate their dissatisfaction with your whole company, it's in for hard times.

Part of marketing is product management (not project management): defining a set of features that would satisfy more needs than any competitors in a vertical market, making sure they can be delivered faster than competitors,' and reprioritizing the features as the engineering proceeds and market needs change.

Good product management involves interacting with customers frequently to test whether a feature set is useful. Better product management brings engineers, marketers, product managers, and customers together periodically. Customers know what their problems are. Engineers invent things no one has ever seen, if encouraged to talk directly to customers. Marketers have a good handle on what needs are shared by other customers. When the three work together, beautiful things happen.

What can you do as a Web developer to help your company succeed? If your marketing department invites you to meet with customers or sales prospects, go. If not, you have two options: First, ask marketing or sales staff members if they can take you along on a customer call. If you've never done this before, try very hard to ask questions and listen to what the customer has to say; don't inject your opinion. Help sell the product, and you'll probably be invited back.

Second, find some friends working for target buyers, and interview them. If you don't know anyone in the field, then purchase a ticket to a trade conference for those buyers, including the tutorials, and schmooze. If you're a shy engineer, you may have to force yourself to do this. I can't tell you how many times I've forced myself to just walk up to people I don't know and say, "Hi, I'm Dan Greening. What does your company do and what do you do?"

First ask general business questions, and then focus on areas where your company's expertise might help. What problems are they having, who are the major suppliers, how do they pay for what they buy, who are their competitors, how do they make money, what are the major costs of the business? You'll quickly think of software or Web solutions that could improve the efficiency of their business.

Take your ideas back to work and start chatting up people in sales and marketing about your ideas. If they love your idea, and start acting like they invented it, don't correct them—this is a good sign. (But perhaps quietly remind your engineering boss, so she gives you a raise.) It doesn't matter who thought of an idea; what matters is that the company and you make money.

Promote the Product

To promote a product, the market department identifies customer touch points, which are your company's Web page, banner advertising, coupons, cash registers or point-of-sale (POS) terminals, trade magazines, trade shows, direct mail, electronic mail, and so on. Marketers create marketing campaigns for different touch points.

Good marketers measure the percentage of return on investment (ROI) for each marketing campaign, keeping track of the prospects reached by the marketing message, and the revenue obtained from each. It can be hard to compute ROI for some campaigns. Trade shows are notoriously expensive, but sometimes they induce reporters to write articles, motivate partnerships, and let marketing and engineering staff members interact with potential customers. Broadcast advertising is also expensive, but appropriate for some consumer products.

As a developer, what can you do to help promote your product? Remember that your application or Web site is an important touch point. If the customer installs your product, you can use the installation time as an opportunity to reinforce the value of the product by displaying key messages recounting the superiority and value of the product. If the buyer visits your Web site, make a trade: Give them access to a white paper or key part of your site in exchange for them registering their name, company, and email address.

If your application has a status monitor or periodic status email, this is an opportunity to highlight your product's value by showing usage statistics, offering key marketing messages, and so on. Pop-up usage tips can drive visitors or customers to learn more about your site or product. Banner ads directing visitors to parts of your site they will like can increase the value they obtain from the Web site (and increase their loyalty).

Be sure to brand the product with the company or Web-site name. If it's a stand-alone application, make sure it has a selection in the Help menu that will bring up the Web site.

Gather Feedback

Software and Web products can't sit still. As soon as a product is released, competitors will start to erode your market share. Start building the next revision of your product as soon as you release the new version.

How do you know what features to add? Ask your customers! Add a form to your site that lets customers report problems to your customer service department.

To take advantage of a customer-service form, it's essential that someone respond rapidly and empathetically to your customers. Make sure your marketing department understands this. Slow responses allow dissatisfaction to grow, and give a customer more time and reason to complain to friends. Remember, you don't always have to fix the problem immediately; many customers only expect you to record their complaint for improvement in the next revision.

You can periodically survey customers about their experiences with the product. Don't do this too often; customers won't endure frequent surveys. If you reward survey respondents, you'll get more responses from a broader cross-section of customers.

Marketing Machinery

There's an old saw that runs around business schools: Marketing is too important to leave to the marketing department. In a sense, the number one job of a CEO—and the whole company—is marketing. The heads of the richest and most influential companies are premier marketers: Michael Dell, Jeff Bezos, and Tom Siebel are examples drawn from high-tech. Many high-tech CEOs started as engineers. Don't you think you should know a little about marketing?

I hope you enjoy my perspective. Coworkers have accused me of being a marketer, but at heart I'm still an engineer. I think of cooperating people as forming a large complex system. Computer networking is a kind of glue that helps them work more effectively together. Internet marketing rides on computer networks and helps people communicate better, with the goal of getting better products. It's all a big machine: hence, "Marketing Machine."

See you next month.

Dan is vice president of engineering for Macromedia's eBusiness Solutions group. You can reach him at [email protected].

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