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[TOP OF PAGE] Editor's Notebook: Learning to Love Uncertainty Three years after the dot-com crash, the future is clear as mud. If anything, the seemingly inexorable movement toward war in Iraq makes business planning an even more difficult task than it has been since 2000. Some analysts suggest we'll finally get back to normal "after the war," but what if this is the new normal? Our lead article this month presumes a lengthy period of slow- or no-growth in IT spending, and proposes a series of "new fundamentals" around which to organize marketing in this context. Perhaps the biggest challenge of all, however, is contending with the palpable political/economic/social uncertainty that most likely will be with us for years to come. Business planners and buyers, not to mention investors, generally hate uncertainty. But we better get used to it. Successful marketing in the future may rely as much on the emotional and cultural ability to make a virtue of uncertainty as on anything else. Of course that's just my opinion....What's yours? [TOP OF PAGE] What's Hot: Beyond Survival: Marketing's New Fundamentals After all the shocks of recent years, the cutbacks, and the economic false starts, services marketers are settling down to a longer-term effort to grind out new sources of growth, profitability, and market share within a slow- or even no-growth environment. Succeeding in this environment is possible only with superior execution across a range of marketing fundamentals, from building a differentiated brand to delighting your customers and everything in between. None of these fundamentals is actually new, but we have not had to worry about all of them for quite some time. Either we were growing so fast in the 1990s that we could look like champions even without hitting on all cylinders, or the rapid downturn pushed us directly into survival mode and a near-total focus on next month's sales. Moving beyond survival requires first-class delivery on all fronts. For services marketers, we believe that success in the difficult and uncertain period ahead will rest on six specific fundamentals:
With little hope left for any rapid or dramatic upturn in technology spending, marketers are solidifying a back-to-the-future approach that brings new energy and creativity to a set of traditional priorities. The hard part, of course, is ensuring a sustainable balance of resources and attention between immediate sales support and the other marketing fundamentals so necessary to longer-term health, growth and profitability. Talking the talk is easy enough, but walking the walk amid continuing pressures to drive immediate sales at all costs may be a bit more difficult. What is your take on marketing's "new fundamentals"? What's missing or doesn't deserve to make the list? What are your keys to success for the next year or more? Read more about the "new fundamentals" in ITSMA's new briefing presentation, Marketing's New Fundamentals: 2003 Annual State of the Profession. The presentation is available free to ITSMA members and for sale to nonmembers. For more information, visit http://www.itsma.com/research/abstracts/OLB020403.htm. [TOP OF PAGE] Research Desk A Sneak Peek at 2003 Marketing Budgets Uncovers Changing Priorities ITSMA's annual budget survey is still in progress, but initial findings suggest that interesting changes are afoot in the spending plans of IT services marketing organizations. First, some good news: Preliminary findings show that services marketing budgets have held steady as a percentage of services revenue over the last several years. Projected services marketing spending for 2003 comes in at about 2.2% of estimated services revenue, which is quite similar to 2000 and 2001 numbers and well above the late 1990s figures of around 1.5%. This doesn't mean that the budgets have increased in absolute terms, given flat or even declining services revenue numbers. But at least marketers have not lost ground relative to revenue. Within the marketing budget, we're seeing an interesting reversal of recent history. In contrast to a fairly steady decline in the percentage of marketing spending dedicated to marketing communications (marcom) since the mid-1990s, projections for 2003 show marcom accounting for almost 40% of overall services marketing spending—compared with 30% or less in recent years. The corresponding cutbacks are coming in product marketing and management and in staff training and professional development. Notwithstanding the widespread refrain that marketers have no program money to spend, we're also seeing a rather dramatic shift in the ratio of personnel to non-personnel expenses. Two years ago, services marketing budgets were close to 50-50 in these two categories. Projections for 2003 show deep cutbacks in personnel expenses and closer to two-thirds of the budget dedicated to program spending.
Within the marcom budget, the marcom mix is also changing. Services marketers are once again spending a higher percentage of the marcom budget on printed collateral. Spending on direct marketing and advertising is also up. Proportionately speaking, spending on electronic promotion is down, as is spending on public and analyst relations and trade shows. Many of the changes can be explained easily enough. For example, the rise in marcom may be due to a much greater emphasis on near-term demand generation, an obvious priority for most services marketing organizations these days. The shift toward more program costs rather than personnel likely reflects a greater reliance on contractors and outside agencies—marketers looking more toward outsourcing just as their clients do the same. What is less clear is whether or not these are the right changes. Given the importance of attaining a new balance of marketing initiatives oriented toward longer-term as well as immediate growth and profitability, does the new mix make sense? I'm not convinced, but I'm certainly interested in hearing more. Let me know what you think. —Julie Schwartz, jschwartz@itsma.com ITSMA's 2003 Budget Survey remains open to members and selected other organizations. If you are interested in participating, please contact Adnelly Reyes at areyes@itsma.com. All participants will receive a detailed final report of survey findings at no charge. Branding From the Inside Out: 10 Commandments for Building Strong Brands Branding is on the upswing again, after a roller-coaster ride during the last decade. Through the late 1990s, with rapid growth in revenue and marketing budgets, technology and networking firms invested heavily in brand awareness with new names, expansive advertising campaigns, and all manner of "logo'd" giveaways. With a few exceptions (such as IBM, Accenture, and BearingPoint), IT firms responded to the downturn by slashing brand budgets and turning all marketing attention to immediate revenue generation. Today, as marketers settle down for a longer period of slow growth and hypercompetition, the importance of building strong brands is again coming to the fore. The difference this time around is that marketers better understand that simply throwing dollars at external awareness won't sustain brand success. The key to building strong brands is defining and delivering on the brand promise. Creating this promise is hard work and it begins with a substantial introspective view—focusing much more on branding from the inside out. Rather than stressing brand awareness, many of the newer branding and rebranding initiatives are based on a more comprehensive approach that begins with internal priorities: sharpening goals for market positioning, strengthening internal alignment around core business objectives, and improving ongoing brand tracking and analysis. Clearly there is not one foolproof branding recipe. Every organization is unique. There are common threads to most brand initiatives, however. The following "10 commandments" comprise a checklist for marketers exploring the requirements of a new brand initiative:
Branding from the inside out holds much greater promise than the advertising-driven approach of the late 1990s. Not incidentally, it also reminds people that branding is for everyone, not just those with multimillion-dollar budgets. Starting with the internal aspects of brand building and taking a more comprehensive approach to internal and external audiences helps everyone live the brand and support the creation of a sustainable brand promise. —Tammy Ribaudo, tribaudo@itsma.com Tech Poll: CIO Spending Plans Continue to Inch Forward CIO Magazine's Tech Poll provides a monthly assessment of technology buying trends from a broad cross-section of chief information officers (CIOs), mostly from North America. The latest survey, conducted January 9-16, 2003, shows continued hopes for modest increases in IT spending for 2003. Key Findings:
January Tech Poll figures are based on 369 survey responses, with 95% from North America. CIOs made up 87% of the total respondents. The respondents represent a wide range of industries, including technology services, manufacturing, finance, state and local government, health care, and wholesale and retail distribution. For complete survey results, visit http://www.cio.com/info/releases/0103techpoll_results.html. Call for Sponsors: 2003 Market Positioning
Studies: Storage Solutions, Outsourcing/Managed Services Learn more about the benefits of study sponsorship:
[TOP OF PAGE] EuroNotes: Strategic Segmentation Most IT services firms in Europe segment their markets by country. This is understandable; cultural issues cannot be overemphasised in marketing, and country segmentation provides a clear structure for organising marketing campaigns and sales territories. After looking at countries, most marketers segment by industries. The problem with this approach, according to segmentation specialist Paul Fifield, is that it is too tactical. A more strategic approach would begin with customer needs, says Fifield, a leading segmentation consultant and international board trustee of the Chartered Institute of Marketing in the United Kingdom. For example, you may say that your firm is in the outsourcing market. But outsourcing is actually the service or solution to a wide range of business problems. The segmentation challenge is to understand the underlying needs that drive consideration of an outsourcing solution, such as cost reduction, access to best practice, or increased flexibility. There may be common business drivers within particular countries or specific industries, but there may not be. "Firstly, you don't segment the market," notes Fifield, "the market segments itself. People have particular needs and wants which identify which segment they are in. The key is to spend time looking for segments, which can be described as a group of people or organisations with a common buying motive." Strategic segmentation often requires wide-ranging organisational change, driven by significant investment in market research and analysis. Making it work demands the closest possible collaboration among marketing teams, research specialists, and sales, among other key functions. Managed effectively, segmentation gives the entire organisation a strategic approach to doing business. It can show where the greatest opportunities lie, and which customer needs you are best able to address. It can also cast a different light on your position in key markets vis-a-vis the competition and suggest changes that can increase your chances of success. —Sara Sheppard, ssheppard@itsma.com Read the complete interview with Paul Fifield. Effective Market Segmentation: The Key to Competing in a Maturing Market is available free to ITSMA Europe members and for sale to others. For more information, visit http://www.itsma.com/research/abstracts/EUV001.htm. [TOP OF PAGE] Toolbox: Reference Management Each month ITSMA highlights a new idea, application, or other type of tool that marketers can use immediately to strengthen their programs and organizations. Managing references is one of the most important jobs of a successful IT services marketing organization. References are one of the primary ways that buyers learn about potential services providers, and positive references are often necessary to validate claims about capabilities and performance. By the same token, poor references can kill deals fast. ITSMA's recently revised Reference Management Guide highlights a four-step process to build an effective program, with tips on soliciting references, building a central repository to manage them, determining potential uses, and then determining how best to use them in individual situations. Visit http://www.itsma.com/Research/toolkit_free/ref_mngmt_guide.htm to read and download the tool. [TOP OF PAGE] Upcoming Events February 25 Breakfast Briefing: Solutions
Marketing in a Slow-Growth Economy (free to members; Newton, MA) For more information or to register online, visit http://www.itsma.com/Events/event_desc/03BB02N02.htm or contact Carolyn Jefferson at +1-781-862-8500, ext. 21, or cjefferson@itsma.com. March 12-13 Workshop: Creating Market-Focused
Growth, with Dr. Lynn Phillips (San Francisco) For more information or to register online, visit http://www.itsma.com/events/event_desc/03WS03N03.htm or contact Lore Griffith at +1-781-862-8500, ext. 19, or lgriffith@itsma.com. Other Upcoming Events
Complete 2003 Events Calendar Event Sponsorship Opportunities [TOP OF PAGE] ITSMA in the News
Ask ITSMA! Do you have a services marketing question? (c) Copyright 2003, ITSMA Please forward this newsletter, but only in its entirety. Public citation or publication of any information herein is encouraged but subject to U.S. and international copyright law and conventions. Any citation must include full attribution to ITSMA. Individual graphics or paragraphs can be published without permission as long as attribution to ITSMA is included. Publication of longer selections or complete articles requires ITSMA permission. For permission or more information, contact pr@itsma.com. Subscription Information Subscriptions are available in text and HTML versions. To SUBSCRIBE or to change the format of your subscription, visit http://www.itsma.com/aspfiles/press/ezine.asp. To UNSUBSCRIBE, please e-mail us at unsubscribe@itsma.com. Back issues of ITSMA E-ZINE are available at http://www.itsma.com/press/press_ezine.htm. |
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