IT IS possible for small business to learn from big companies. While many owners of small and medium-sized enterprises, or SMEs, often take an "us versus them" attitude towards their larger business counterparts, there are some basic marketing principles that apply equally well to both big and small operations.
A critical part of any marketing strategy is the choice of target market that a firm takes on, with its relative offerings of product and service.
And it is possible to consider the actions of two Canadian business giants, Nortel Networks and RIM, in that discussion.
The Council of Canadian Academies released a report on innovation and business strategy in June. The report is a detailed analysis of how Canadian businesses rate in innovation and research and development internationally.
The report also features a very interesting discussion of the marketing actions of Nortel and RIM, how the two firms differed from their roots through to their strategic decisions, and how marketing strategy impacted the outcomes of their strategic decisions.
A basic part of Marketing 101 is determining how to choose a target market and how to fulfil its needs.
In many high-tech firms, companies use a more product-oriented approach than a market-oriented one, focusing first on their product and second on market needs.
It is hard to tell which came first with Nortel Networks, which had its roots in traditional markets providing telecommunications equipment.
This type of market approach in the information technology market (referred to as legacy equipment providers in the report) grew out of past markets and past market needs. To a great extent, traditional telecom needs are being met by the next generation of wireless technologies, resulting in a mix of old and new for firms such as Nortel.
The notion of old and new markets is an odd one that is based not on how long the market has existed but rather on whether or not the same market need is being served by new technologies or applications.
It is possible to use the analogy of the automobile industry, moving from horse and buggy to motorized vehicles. Both are transportation methods, but one is obsolete.
From a marketing perspective, the market for horse buggies has declined out of existence despite the fact that we have even more of a need for transportation (more people going longer distances) than we had back in horse and buggy days.
In other words, the need persists but how we fill the need as consumers or businesses evolves with changes in technology and lifestyle.
Nortel Networks, which has recently become one of Canada’s biggest corporate failures despite is premiere position in previous years in the IT industry, was heavily invested in providing equipment to corporate clients.
It carried a portfolio of products that were well regarded but slowly becoming obsolete.
Price drops as products become less popular, a process that has been forced into hyperdrive by offshore competitors whose cost structures are lower than ours.
The end result was a nasty fall from grace as Nortel struggled to reposition itself in more innovative markets.
RIM was born to be a research-oriented firm, grown with venture capital. This reality would create a fundamentally more nimble company with a much more research-oriented culture.
RIM caters to similar markets, but with new technological applications that are not yet mature.
However, RIM does have one critical flaw: it is mainly a one-product firm. The BlackBerry is what has propelled RIM into stratospheric profit levels and it continues to give RIM a strategic competitive advantage despite a growing number of competitors.
RIM is working the product life cycle in a very innovative and competitive way.
However, it will have to follow the BlackBerry with even greater innovations to keep its pre-eminent market position.
This requires continuous research and development, with more patent filings and a relentless search for the next big thing to fill the market need.
Which company was more competitive? Nortel was in its day, and RIM is today.
And that difference is part of the reason why RIM continues to succeed in the wake of Nortel’s fall from grace.
Karen Blotnicky is president of TMC The Marketing Clinic and a professor at Mount Saint Vincent University.
This is a great article to review and learn the ropes of building a world class business. More to come.
