Scientists Discover New Form of Matter
This makes a total of six forms of matter. And I remember only having to learn solid, liquid and gas just 25 years ago.
Window Manager - A (Now Retired) Executive Who has Nothing to do but Look out the Window
Thursday, January 29, 2004
Waves at HP
Having worked in the tech industry for a decade and a half, I have watched a number of interesting corporate changes over the years. I watched Apple grow from a small company to a large one, flirt with bankruptcy, and recover. I remember visiting this small company I never heard of called "Cisco" back in the early 1990s (if only I had bought its stock then!). Stupid acquisitions like the AT&T purchase of NCR were interesting. And all of this was before the whole tech bubble and subsequent burst.
One of the sadder things to have watched has been the trashing of Hewlett Packard's culture. I never worked for HP but I have called on them for years as a supplier and know people who work there. HP was recognized throughout the tech industry as one of the prototypes of the modern tech company in the way they treated their workers, their open environment, and the close interaction between top management and staff.
All of that has changed, and it's becoming public. I recommend reading Fear and Loathing at HP.
One of the sadder things to have watched has been the trashing of Hewlett Packard's culture. I never worked for HP but I have called on them for years as a supplier and know people who work there. HP was recognized throughout the tech industry as one of the prototypes of the modern tech company in the way they treated their workers, their open environment, and the close interaction between top management and staff.
All of that has changed, and it's becoming public. I recommend reading Fear and Loathing at HP.
What is TAM, SAM, SOM?
TAM, SAM, SOM
The first part of creating a marketing plan is to figure out the size of your market. The total market category is usually referred to as the TAM, or Total Available Market. For example, the TAM for cellphone cameras has shown significant growth over the last few years and is forecasted to penetrate about a quarter of all cellphones in 2004.
Not that the total cellphone forecast in 2004 ranges anywhere from 500 million to 550 million handsets. I have used the smaller number here (500 million) since in forecasting, it is usually better to underestimate and beat forecast than it is to overestimate and come up short. However, what is important here is really the order of magnitude and not the exact number since forecasts are rarely very accurate.
The next part of a marketing plan is to figure out your SAM, or Served Available Market. A particular product usually can't meet the specifications of 100% of the TAM, so the total market share a product can possibly penetrate is usually less than the TAM (It is possible for a SAM to be equal to a TAM, but is unusual in technical products).
This is when segmenting a market becomes useful to figure out the SAM for your product. If your SAM is less than the TAM, it can point you towards product extensions. In the end, instead of one product serving the entire TAM, you typically will have a series of products with different SAMs that together serve the entire TAM.
There are a variety of ways to segment a market (I got this question in an interview: How many ways are there to segment a market. Answer: There is no limit, but how you do it depends on what you are looking for). For the purpose of this analysis, I will use two examples: country penetration and camera resolution (the number of pixels used to capture the picture).
The country penetration rate is dependent on a variety of factors including migration to higher speed cell standards (2.5G and 3G), how the phones are distributed, the churn rate, and cultural factors. These are all reasons as to why in Japan and Korea cameras are essentially a standard feature. The main issue here is that the product I am marketing isn't necessarily usable in every region "as is" and may need modifications depending on cellphone standard (GSM, CDMA) and other country specific issues.
Resolution is also a big issue. I am not going to go through the definitions, but the chart shows the cellcam market moving towards higher resolutions over time (CIF is about 100K pixels and 3M is 3 million pixels).
The last step in this exercise is to figure out your SOM, or Share of Market. How many am I selling today and what is my goal for next year? Who do I sell to? SOM is calculated based on your SAM, but it should be compared to the TAM so you can tell if you should shift your product to a different SAM.
One of the interesting things about the cellcam market is that the companies that sell the most cellcams are not the ones selling the most handsets. The reason for this is the graph above showing the high penetration rates in Japan and Korea versus the rest of the world. This factor should be interesting to watch as cellcams increase penetration worldwide since it has the potential to change worldwide cellphone market share.
This last step also starts you on going through the "3 Cs", or Customers, Company and Competition.
The first part of creating a marketing plan is to figure out the size of your market. The total market category is usually referred to as the TAM, or Total Available Market. For example, the TAM for cellphone cameras has shown significant growth over the last few years and is forecasted to penetrate about a quarter of all cellphones in 2004.
Not that the total cellphone forecast in 2004 ranges anywhere from 500 million to 550 million handsets. I have used the smaller number here (500 million) since in forecasting, it is usually better to underestimate and beat forecast than it is to overestimate and come up short. However, what is important here is really the order of magnitude and not the exact number since forecasts are rarely very accurate.
The next part of a marketing plan is to figure out your SAM, or Served Available Market. A particular product usually can't meet the specifications of 100% of the TAM, so the total market share a product can possibly penetrate is usually less than the TAM (It is possible for a SAM to be equal to a TAM, but is unusual in technical products).
This is when segmenting a market becomes useful to figure out the SAM for your product. If your SAM is less than the TAM, it can point you towards product extensions. In the end, instead of one product serving the entire TAM, you typically will have a series of products with different SAMs that together serve the entire TAM.
There are a variety of ways to segment a market (I got this question in an interview: How many ways are there to segment a market. Answer: There is no limit, but how you do it depends on what you are looking for). For the purpose of this analysis, I will use two examples: country penetration and camera resolution (the number of pixels used to capture the picture).
The country penetration rate is dependent on a variety of factors including migration to higher speed cell standards (2.5G and 3G), how the phones are distributed, the churn rate, and cultural factors. These are all reasons as to why in Japan and Korea cameras are essentially a standard feature. The main issue here is that the product I am marketing isn't necessarily usable in every region "as is" and may need modifications depending on cellphone standard (GSM, CDMA) and other country specific issues.
Resolution is also a big issue. I am not going to go through the definitions, but the chart shows the cellcam market moving towards higher resolutions over time (CIF is about 100K pixels and 3M is 3 million pixels).
The last step in this exercise is to figure out your SOM, or Share of Market. How many am I selling today and what is my goal for next year? Who do I sell to? SOM is calculated based on your SAM, but it should be compared to the TAM so you can tell if you should shift your product to a different SAM.
One of the interesting things about the cellcam market is that the companies that sell the most cellcams are not the ones selling the most handsets. The reason for this is the graph above showing the high penetration rates in Japan and Korea versus the rest of the world. This factor should be interesting to watch as cellcams increase penetration worldwide since it has the potential to change worldwide cellphone market share.
This last step also starts you on going through the "3 Cs", or Customers, Company and Competition.
Friday, January 23, 2004
Keeping the Door Open
Director (now President) Mike and I had our "follow-up" conversation after I gave notice on Wednesday. This is the fourth time I have given notice at a medium to large company and the response is always the same: stick around, things will change. We have big plans for you, etc.
As noted before, Mike was just promoted to his position, so I can't blame him for the situation here, and I DO think changes will be made in the U.S. division. The problem is this will solve only half the problem. A lot of my frustration is at HQ, which seems slow to change.
Mike asked me to stick around a year to see what happens. I turned it around: "How about I leave for a year and then we look at where we both are." Mike seemed to like that. In addition, my new office is just two miles away from my current office, so I told Mike we would do lunch every month or so. I even offered to provide marketing insight from time to time if he thought it would be helpful (he didn't respond, maybe since I didn't say if I meant for pay or not).
The bottom line is that Mike, the president of this U.S. division, and I are going to stay in touch. This keeps the door open should things not work at my new company and provides a valuable networking contact for other opportunities.
As noted before, Mike was just promoted to his position, so I can't blame him for the situation here, and I DO think changes will be made in the U.S. division. The problem is this will solve only half the problem. A lot of my frustration is at HQ, which seems slow to change.
Mike asked me to stick around a year to see what happens. I turned it around: "How about I leave for a year and then we look at where we both are." Mike seemed to like that. In addition, my new office is just two miles away from my current office, so I told Mike we would do lunch every month or so. I even offered to provide marketing insight from time to time if he thought it would be helpful (he didn't respond, maybe since I didn't say if I meant for pay or not).
The bottom line is that Mike, the president of this U.S. division, and I are going to stay in touch. This keeps the door open should things not work at my new company and provides a valuable networking contact for other opportunities.
Tuesday, January 20, 2004
Fan Mail Marketing Questions
One reader sends in the following:
In a role as Strat Mktg Director, how much customer interaction do you have? Do you meet key customers and quarterback big sales, and handle PR and media engagements?
Or are you mostly concerned with position, strategic direction, partnerships, etc?
The short answer is: depends on the size of your company. I have been in "strategic marketing" roles that did every single activity you have listed, plus lots of others. This would be typical in smaller companies where the marketing team has ownership of figuring out the market, defining the product, doing business development and getting it rolled out and sold to customers. In this "cradle to grave" scenario, the marketing team owns the product from concept to obsolescence and overseas each part of the process including development, sales, business development, PR, etc. Perhaps there are specific departments what specialize in these areas (design, salespeople, marcomm, etc.), but the Marketing Manager owns the product and thus rides heard over the process and each team.
Currently, my "strategic marketing" role is almost exclusively the latter listing of responsibilities: positioning and strategic direction. It is almost an "Ivory Tower" sort of position, figuring out what is on the chess board and what it's going to look like in the future. I send suggestions on where to move the pieces to the Powers That Be. Sometimes they listen, usually they don't.
The job I verbally accepted today - while a marketing role - will be almost 40% sales focused, and I am expected to go out and close big design wins and key customers. There will be less input on product development and more focus on customer development.
This really branches into a whole discussion of "What is Marketing?", and I recommend you read the discussion over at Brand Mantra which goes into this topic at length.
In a role as Strat Mktg Director, how much customer interaction do you have? Do you meet key customers and quarterback big sales, and handle PR and media engagements?
Or are you mostly concerned with position, strategic direction, partnerships, etc?
The short answer is: depends on the size of your company. I have been in "strategic marketing" roles that did every single activity you have listed, plus lots of others. This would be typical in smaller companies where the marketing team has ownership of figuring out the market, defining the product, doing business development and getting it rolled out and sold to customers. In this "cradle to grave" scenario, the marketing team owns the product from concept to obsolescence and overseas each part of the process including development, sales, business development, PR, etc. Perhaps there are specific departments what specialize in these areas (design, salespeople, marcomm, etc.), but the Marketing Manager owns the product and thus rides heard over the process and each team.
Currently, my "strategic marketing" role is almost exclusively the latter listing of responsibilities: positioning and strategic direction. It is almost an "Ivory Tower" sort of position, figuring out what is on the chess board and what it's going to look like in the future. I send suggestions on where to move the pieces to the Powers That Be. Sometimes they listen, usually they don't.
The job I verbally accepted today - while a marketing role - will be almost 40% sales focused, and I am expected to go out and close big design wins and key customers. There will be less input on product development and more focus on customer development.
This really branches into a whole discussion of "What is Marketing?", and I recommend you read the discussion over at Brand Mantra which goes into this topic at length.
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