Wednesday, February 22, 2012

Product vs Solution Marketing

Product Marketing

Product marketing is a more traditional way to look at marketing. Typically it encompasses the first four Ps of the marketing mix: product, price, place, and promotion. I've heard it said that's laughably vague, but when you consider everything necessary to market a product, vague may be necessary to encompass all aspects of expertise.

The product marketer promotes the features and benefits of a product without really considering all of the needs of the target persona. I don't mean they're ignoring those needs with respect to the product, but they may not think about contingent needs. The product marketer simply doesn't consider partner products, services or other components common to solution marketing in the product marketing strategy. Because of this, the person undertaking this kind of marketing needs to be an expert on their product in every capacity including market research and strategy, technology, competitor offerings, tactics and analytics. This allows for product-based differentiation and positioning rather than solution-based.

Solution Marketing

Solution marketing, on the other hand, takes those features and explains how they are going to benefit the customer and offers an entire suite of options available to them in order to answer whatever needs the customer has – in their entirety. In other words, the solution marketer not only needs to understand the product but also the segment or industry landscape, the partner products, industry trends and how they all fit together. In addition, a solution-oriented marketing strategy is typically an enterprise-wide undertaking, so the professional must be able to operate in a much more cross-functional leadership role. Steve Robins, the founder of solutionmarkingblog.com explains it this way in his presentation Introduction to Solution Marketing:

Product MarketingSolution Marketing
ProductFeatures and Benefits
  • Best features
  • Newest capabilities
  • Technically advanced
  • Fastest processor
Customer Needs
  • Streamline processes
  • Improve customer service
  • Lower costs
  • Ensure compliance
PromotionPush or Outbound MarketingCustomer Engagement
PriceCost PlusCost vs Benefit

As you can see above, the 4Ps can still apply to solution marketing but I think they could be better updated to reflect the more customer-centric paradigm. We replace product with solution; promotion with engagement; price with value; and place with access. These four elements are much more reflective of how we need to update our marketing techniques to better engage the most current generations of X, Y and Z. They expect an experience not just a product.

The fact that we are asking more encompassing questions doesn’t change the process we go through in order to answer those questions but we do have to step into our customers’ shoes. We need to understand how to solve their problem so we need to be able to look at the bigger picture. It’s no longer “They need their CRM software to have features 1, 2 and 3” but rather a more all encompassing, “What regulations are there? What is their current system not doing? Will they need training? Is there a partner product that will fill a need we don’t quite have the answer to? Will it integrate with their other applications” and more.

We no longer push the information out to them with interruption marketing but rather engage them in a dialogue. We research where our customers are going to learn about our products. We find out who they’re talking to and what they’re watching. This is true whether we’re marketing B2B or B2C. The B2B customers are paying attention to what the end-users who purchased the product from the distributor are saying, just as much as the B2C customers are listening to their peers.

The price is no longer necessarily based in an “I get this many features for this price” mentality. The customers want to know not only what the features are, but is the product the right fit for the job and what else comes along with it. They’re no longer as willing to pay a higher price for unwanted features. They are willing, however, to pay a higher price if the product comes with extra training they need, or it integrates easier with software they already have in place, or a technical support plan is offered. Our customers want a value package for their money, not just the assurance that, “Yes, this product has all the features you need and it will integrate with XYZ software”.

Finally, we need to know where they want to purchase the item and how they want it delivered. We need to know if they want to buy direct, through a reseller, maybe on contract or any number of other channels. Once we know that, we need to figure out how they want it delivered. Do they want instant download? Maybe they want it shipped. And in the end, maybe there are new channels that we didn’t know about that we can take advantage of.

Conclusion

Solution marketing requires a much more in-depth approach than product marketing, but in the end, it’s the more effective strategy. It increases the customer lifetime value and satisfaction as well as increasing brand equity. The value is perceived as higher so margins increase and, taking the entire ecosystem into consideration, the potential is there for a more differentiated offering. Back in 2003, McKinsey & Company estimated, in their August 2003 McKinsey Quarterly that it could result in a 3-7% increased return on sales, but I wasn’t able to find any updated results.

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