Let the market be your amusement park

December 3, 2001

BY MICHAEL KRAUSS

When I was growing up in Chicago, there was an amusement park called Riverview that had several scary roller coasters: The Fireball, Comet, Silver Flash and the fearsome Bobs. As a pre-teen, I was petrified to ride on the bigger coasters, particularly the Fireball, which dove into a dark tunnel at speeds that -- as I recall -- were supposed to be greater than 100 miles per hour. The sheer thought of the Bobs, with its huge hills and dips, made me shudder.

As I grew older, I learned to handle the dips of the big roller coasters by keeping my eyes open and exhaling -- or just screaming my lungs out. By the time I was a teenager, I was having a great time.

Unfortunately, while I was still a high school freshman, Riverview was closed and redeveloped; now, it's an urban shopping area. I never got to ride either the Fireball or the Bobs, because I learned too late how to manage the dips.

Technology marketers know a lot about peaks and valleys, and now, the high-tech marketplace is filled with predictions of few highs and many lows. Marketers in the industry now need to know how to handle the dips.

Lately, technology companies, like most organizations, have dampened revenue and earnings expectations. Information technology industry watcher John Gantz, chief research officer of International Data Corp. -- the Framingham, Mass.-based technology research firm that publishes Computerworld and tracks the prospects of the high-tech industry -- said in a recent forecast, "The economic turn-around that was anticipated to begin in (the fourth quarter) of 2001 will be delayed until mid-2002."

While that's the consensus of many economists, it's not always clear what we marketers should do during difficult times. Complicating the issue is the fact that the economic predictions aren't all gloom-and-doom: Gantz and IDC also believe that, "Over the next five quarters, IT users worldwide will spend more than $ 1.3 trillion. IDC predicts IT users world-wide will spend $ 100 billion more in 2002 than they did in 2001."

That's a lot of marketplace opportunity for technology marketers.

In considering how marketing priorities should shift in these unpredictable periods, Dave Munn, the chief executive officer of Information Technology Services Marketing Association (ITSMA) -- with U.S. offices in Lexington, Mass. and Santa Clarita, Calif. -- reminded me in a recent telephone interview that Dell, with its cost-minimizing model, is prospering. And he points to Oracle, which had flat revenues but increased profits in its last quarter by moving early toward operational effectiveness and away from a focus on growth. He admires GE for the same reason. Consultant IBM Global Services and outsourcer EDS are a few more examples of successful high-tech marketers that he points out.

Munn contrasts IBM Global Services' approach with that of Sun Microsystems: "If you look at a company like Sun, they say they're a technology company. They're product-focused; all of their high-margin service and support are tied to their products.

"In contrast, IBM changed its view a couple of years ago. (Its executives) used to say they'd only service IBM products. Now, they say, 'We'll service IBM customers,'" Munn adds.

IBM will service a customer whether they have IBM products and platforms or those of a competitor, and IBM will even operate the systems on an outsourced basis. In a downturn, when hardware and software sales shrink, that broader customer-centric vs. product-centric approach gives IBM Global Services an advantage.

So, to establish and manage a set of marketing priorities in challenging and downright confusing times, I suggest you do the following:

• Batten down the hatches. When you hit stormy weather, survival is key. Trim costs to ensure that you can ride out the storm. Protect your assets.
• Do a marketing audit. Take a hard look at the markets you serve, and ask yourself if you've aligned your priorities with the best opportunities.
• Focus on critical customers. Customer retention must be a key priority. Make sure you serve and retain your best customers, and don't get distracted.
• Pay attention to your capabilities. Layoffs are rife in a downturn and may be a regrettable necessity, but cutting too deeply or inappropriately can jeopardize an organization's ability to regain share when the economy rebounds.
• Remember what you stand for. Live up to the brand promise. Short-term marketing cost-cutting that sacrifices your brand principles can make for a Pyrrhic victory; you might survive the recession only to flounder in the recovery.
• Prepare to spend into the upturn. After trimming your marketing sails and cutting costs, it's tricky to know when to invest again. The winners will begin to spend in anticipation of the upturn, which means now's the time to plan those spending initiatives.

While many marketers dislike down markets and volatile economic conditions, others are prospering. The trick is to keep your eyes open, inhale and exhale, and avoid screaming. (It won't do any good.) A patient and systematic focus on the road ahead is what's needed. As every roller coaster veteran knows, after a big valley, there's a big hill.

It's just a matter of time, so as much as possible, enjoy the ride.

Michael Krauss is a partner with Chicago-based DiamondCluster International. He can be reached at news@ama.org.