Looking For Rising Stars?

With HD, 3D and 4K all arriving in the space of a few years, it is interesting trying to guess which technologies will become mainstream. This led me to reflect on how we market a product at the early stages of its life cycle, and the classic Boston Consulting Group model provides a good framework to look at this. By industry and PR guru Anna Wood.

With the BCG model, an embryonic or new born product is sometimes called a 'problem child'. It needs nurturing and investment in development, and careful marketing to bring it to the customers' attention. In reality, many businesses begin marketing before the product is complete – especially when the sales cycle is going to be a slow one.

In marketing terms, if the product is a true breakthrough technology, there will be media interest in it and plenty of curiosity from the market, but it may be challenging to convince the market that the innovation is indeed a viable solution, and that it has a business application. The product – and how it works – may not be understood at this stage and it may seem that nobody wants to buy it. So marketing the problem child is about winning confidence and credibility. People use educational pieces to explain their technology, without giving away IP of course, but saying enough to gain understanding and acceptance.

If the new product succeeds, the problem child may become a 'rising star'. This is a product which is new, exciting, answers a need and sells at a premium price. If the developers have judged it correctly, and if the market potential is there, sales and market share will grow fast – and the product will become soon become very profitable. If the product is based on emerging technologies, it may not have very much competition for a while, so there is great potential for growth. The challenge for the marketing managers will be to get the message out to the marketplace as fast as possible, and to find the first few customer success stories and use these to build sales momentum.

Rising stars turn into 'cash cows' when they become established and sales continue to roll in. However, by this stage in their life cycle, most products have competitors, which will be vying for market share. This means that the new challenges for marketing will revolve around building a trusted brand, differentiating the specific features of this product, and holding a position in a competitive market.

It is likely that the manufacturer will be spending its marketing pounds and dollars on branding and advertising, and it is during this period that the product should repay the investments made in the early days. Good marketing strategies might be to use CRM to address the market systematically, hire a professional sales force and start to grow maintenance income.

Markets never remain the same for very long, and cash cows do not last for ever. After some time, the market becomes saturated, or another rising star appears which starts to grab market share.

At this stage, the BCG called the product a 'dog' (I guess they were not dog lovers). The product is becoming a little tired and it may be getting quite costly to maintain it and keep long-standing customers happy. Perhaps this is time for the entrepreneur to move on, or maybe look at tailoring the product to fit into new niche markets. It tends to be at this stage that market prices decline, and companies respond by cost-cutting – which no manufacturer really wants to do.

Some technology products seem to die, but not all. Some, like Betamax for consumers, become outdated and are superseded in the main – and some seem to remain with us for ever and simply become part of the everyday landscape – as we have seen with WiFi or mobile phone SIM cards – they have become so ordinary, and so inexpensive, that no one remarks upon them anymore.

For a business to remain balanced and healthy, it should always have a portfolio of products at different stages in their life cycle, and there should always be one or two problem children. They may not all go on to become rising stars – but it is from these small beginnings that future business will grow.

Anna Wood works with small-to-medium technology companies on short and long term PR and Marketing projects, and specialises in the broadcast sector.

The article is also available to read in BFV online.

(IT/JP)