Production vs. Market Driven Companies

Ken Stine
10/23/2002

Over the years I have had occasion to work with two basic types of companies: production driven and marketing driven. While both types can be well run and highly successful, I have come to believe that without an understanding and application of sound branding practices no company will ever achieve its full potential and will meet many unanticipated challenges further down the road. Unfortunately, production driven companies are particularly susceptible to this path. I have seen it happen many times...

By production driven companies, I mean those companies whose management believes that technical superiority of their products is the key to their success in the marketplace. In such companies, the key decision makers are engineers, not marketing or sales types. In many cases, key management has never stood face-to-face with prospective customers in a selling situation. They invest more heavily in product development and relatively little in marketing, sales or branding. In some cases they even display an open disdain towards good marketing or branding principles. Their literature, manuals, industrial design, and product labeling is too often handled by the engineering department without regard to good branding or even sales rules. They tend to regard marketing and sales as necessary evils. They dismiss inputs from field sales as “uninformed” and rely instead on their engineers to provide direction to new product development. Then they tend to force-feed their own technical prowess to the marketplace. Almost no attention is paid to branding, marketing, or consumer needs.

By marketing driven companies, I mean those companies whose decision makers come from within marketing and sales ranks. The upper echelon of the company believes in the value of good branding, and invests in it. Within these companies there seems to be a more collaborative process between marketing and engineering, recognizing that it is a give-and-take relationship, one needing the other. The company is driven more by an understanding of market forces than by technical achievement.

As a true-life example, I will use a company (Company A) that early in its history invented a product that offered a revolutionary new method for controlling the quality and increasing the throughput of a high complex manufacturing process. In those early days, it was the first and only product of its type, developed by the founding engineering genius. They gave the product a name, which I will call the “Centurion” for the purposes of this article. A product indicia was created by someone in the engineering department and applied to the product (again by the engineering department). For several years this product was highly successful and the product name, not the company name, became synonymous with the new method of control process. The company owned 100% of the market, a position they held for a few years. The company prospered.

Then the inevitable happened. A competitor (Company B) came onto the scene. It is debatable whether this competitor has ever had a technically superior product, but they did have a strong marketing person somewhere in a position of authority. Their product was reasonable well branded and they were talking to their customers in terms they understood. Their initial marketing thrust was one of technical equivalency, but claimed simplicity of operation and better pricing as their advantage. Company B began to gain market share.

Company A responded by developing and releasing a new, technically improved product, called the “SuperCenturion”. The war had begun and it continued to escalate over the next twenty or so years. Company A developed a bewildering array of products that they continued to claim were technically superior to those of Company B. Each new product generation had an increasingly complex naming system which began to seriously dilute the original Centurion, e.g., SuperCenturionX, SuperX, SuperDuperX, SuperDuperCenturian, SuperDuperCenturianXG, etc. At the same time, the original “Centurion” name began to fall into general generic use. Company A continued to pay little attention to their brand and it became almost impossible to explain or distinguish between the complex product families or their functions. At no point in its history did Company A ever define a clear concise branding statement for its employees or its customers. Even today, a branding statement still does not exist.

In the meantime, Company B worked hard to maintain the clarity of its brand. It is simply “easier to understand, operate and is less costly.” This simple message was communicated consistently throughout all its marketing efforts and support materials. They placed emphasis on their company identity and philosophies, not their individual products. Line extensions were clearly identified and carefully named to support and reinforced their brand. Its products even looked simple to operate. They looked more modern, and less engineering-like. Company had no qualms about calling in outside branding professionals whenever called for by the situation.

Today, the original company retains only about 40% market share. Company B now has 45%.

In addition to a smaller market share, when and if the founder of Company A wants to sell the company he’ll have very little to offer potential investors. What he has not recognized is that his engineering genius had become the company brand. When he is no longer there, nothing much will be left of value other than inventory and some technical drawings. One can only surmise how much greater the value of his company would be today if there were a strong brand to leave behind, rather than go out the door with him.

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Polaris, Inc - Branding Solutions

Production vs. Market Driven Companies