Sunday, June 10, 2012

Do Tech companies from the enterprise market struggle in the consumer market?

As part of the Business to Business marketing course in MBA, students are taught how branding and marketing is equally important in enterprise (B2B) markets as much as in consumer markets. There are scores of case studies and research papers that emphasize why and how companies need to communicate the value that they offer to their client companies. Given that this has been done for a few decades now, I believe companies are doing the B2B marketing pretty fine. However, surprisingly, what I have observed recently is that some companies that do well in the enterprise segment do not seem to be doing that well in the consumer segment. B2B and B2C are different ball games for sure. Some companies that I have highlighted in the post below have / had good consumer products but still are not able to get the mix right to succeed. Marketing directly to the end consumer needs a thorough understanding of consumer behavior – something which seems to be missing in the three cases I present below.

Dell Streak – too early to be introduced or was Dell too early to exit that segment?

Samsung recently launched its latest model - the Galaxy S3 that comes loaded with a massive 4.8 inches screen and firmly places Samsung at the top end of the most desirable Androids. Its 5 inch Galaxy Note has also been flying off the shelves. That lead me to think about Dell Streak, which was probably the first 5 inch Android that came up (but didn’t succeed). The large screen made my Galaxy S feel smaller but the bulkier hardware of Streak kept me away from it.

Was Dell Streak slightly ahead of its time? Probably yes. Android, and smart touch phones, were a fairly new concept at that time and people probably did not really appreciate what all they could do with the screen real estate. Samsung, on the other hand, has worked on the Android platform consistently and delivered one good phone after another and then raised the bar by showcasing their innovation with the Note and S3. Dell seems to have got the product fundamentals right that people would want a bigger phone because of the awesome things that they can do. But this was not an enterprise selling situation where their sales staff could convince clients over a PPT presentation that Dell Streak is the product they would like. Consumer markets operate differently – you can’t possibly call all potential consumers to a detailed power point presentation! Consumers learning happens over time – their attitudes towards touch screens (not reliable, don’t work properly) needed to change. One other thing where the Streak probably failed was category membership – consumers could not understand which category Dell Streak fits in – is it a smart phone or is it a tablet? Today, when the market has learned about various devices, Galaxy Note uses the same question as its tag line!

Dell is really good at execution. Its direct delivery system allowed it to cut costs and sell customized PCs at lower costs. But once that model’s novelty faded, others have gained market share. It might also have struggled because it never had the distribution channels, so it would have had to create those channels afresh. Given that a large part of the earnings come from enterprise, Dell seems to have made its decision in favor of the enterprise market now. I am sure it will be a while before Dell tries to come back to the ultra-competitive consumer market; but it should get some consumer marketing champions in its team to capture and interpret trends.

Windows Phone – probably the first time a “Windows” device has to fight for entry in to consumers’ homes!

Another such marketing disaster seems to be happening currently with Windows Phone. While there are rave reviews about the OS and there are reports that predict Windows Phone to be taking over a huge market share shortly, I have my doubts because of the lack of proper marketing for this phone. Microsoft has never really needed to advertise its products aggressively, primarily because Windows PCs are so omnipresent. A good part of that is because of Microsoft's marketing at the enterprise level. But given that there aren't many operating systems anyway, Microsoft really hasn't had to try and understand the end consumer. MS has recently taken to advertising on televisions for its Windows 7 operating system. But even that campaign seems to be a reinforcement campaign, meant to just keep MS in the public awareness; to let people know that Windows 7 is there and they should choose that instead of sticking to the old war horse, Windows XP. I would have loved to see an advertisement for Windows Phone that would attack Android as just an “inspired” (and cheaper) version of iPhone and then show how much Windows Phone is innovative and focus on its key product features like the metro styling. It should have been positioned as an iPhone rival with proper focus on promotion of the app market ecosystem that has been created. That would have helped it move from the salience and performance levels to resonance and relationships. But, we see none of that. And God only knows what has happened to Nokia – from the way things are going, it seems it may never regain that top slot it once had. There are no top end aspirational phones like HTC One X or Samsung Galaxy S3 in the Windows Phone area. Not so encouraging reviews about Windows 8 and other bad press about Microsoft in general does not help either. The imagery of Windows Phone in the consumer mind does not seem to be correct, yet but still, as I have written previously, Microsoft does not seem to be serious!

Blackberry - Good for enterprises but does the consumer care?

Blackberry is another example. Blackberry was always successful based on the value that it was bringing to the enterprises by providing push email and BBM to its executives who could become more productive but when it came to enticing the end consumer directly, they faltered. However, one must give some credit to BB for being more aggressive in the consumer market. But they seem to have missed the basic trick about understanding what differentiates them from others, as I have highlighted previously. Blackberry tried to become a consumer brand by doing the famous "Blackberry boys" campaign but my feeling is that they probably got their positioning confused with that campaign. It certainly diluted the executive phone positioning and so, if an executive has to go for a "fun" phone, why wouldn't he go for an iPhone or Android. This is a BIG why - if BB answers it correctly, it could keep laughing its way to the bank!

Conclusion: Mother's advice holds good even today: Whatever you do, do it well!

Consumer and business markets are obviously different but does it imply that brands like Dell and Blackberry which excel in enterprise markets have a native disadvantage when it comes to consumer products? It might be too harsh to term it as disadvantage but it definitely is a major challenge. But given the trends of cloud at the enterprise level and mobile devices at the consumer level (often to access the data from that cloud), these companies might do well to keep a dedicated team for both markets to leverage the advantage of convergence. And irrespective of the market they follow, they should understand that both are different and require pretty different strategies and tactics to succeed.

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