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microISVs versus Software Giants

January 8th, 2012
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microISV competition using trial softwareSince the beginning of shareware, small software development companies have been competing with software giants. On paper, it’s a tough software marketing challenge. It’s very difficult for the microISVs to win these competitions. Yet year after year, we find one-person companies taking significant market share away from the well-financed software publishers.

How can a small company – say, a small software developer – compete with a huge company? microISVs can learn a lot from David Ogilvy. Time Magazine called David Ogilvy the most sought-after wizard in the advertising business. Chapter 14 of Ogilvy’s classic book “Ogilvy on Advertising” is called “Competing with Procter & Gamble – Who’s afraid of the big bad wolf?” And the lessons from this 1983 book are as valid today as they were when Ogilvy penned it.

Ogilvy had competed against Procter & Gamble for decades, and he respected P&G’s advertising prowess. Yet in head-to-head competition, Ogilvy’s advertising firm helped his customers take significant market share away from P&G.

Procter & Gamble spent $700,000,000(US) a year on advertising back in the early 1980s. Their sales were $12 billion a year. P&G’s success was based on their intelligent application of sound marketing principles. Here are some of the things that P&G did to become successful. Today’s software developers can learn a lot about software marketing from P&G’s successful practices.

(1) Product samples

Ogilvy tells us that P&G distributed home-delivered samples on a massive scale. The company was convinced that if they let consumers try their products, they would want to buy them. This was a very expensive way to market consumer goods. They had to manufacture samples, postal-mail them to consumers, and be sure that grocery and department store shelves were stocked with P&G’s products when it was time for end-users to buy more.

market search for microISV software develoopersSoftware developers have a much easier time distributing trial versions on the Internet. Once a software application has been developed, the distribution cost is nominal. No doubt, the cost of advertising and promoting your software, and letting potential buyers know where to find it, can be significant. But these expenses pale when compared with the costs of manufacturing and distributing samples of toothpaste or laundry detergent.

For prospects who land on your website, you have to decide if you want to sell them your software, or entice them to download the trial version. For most developers, selling software should be the primary goal, and coaxing prospects to download the trial version should be a distant second choice.

(2) Categories and competition

P&G never entered small categories unless they expected them to grow, Ogilvy explains. The consumer products giant simply wouldn’t spend time in niche markets. While this may be a good practice for well-financed publicly-traded software companies, many microISVs find it quite lucrative to find and dominate niche markets.

“They (Procter & Gamble) often enter more than one brand in a category,” Ogilvy wrote, “and allow each brand to compete with its sibling – with no holds barred.” There are some software developers who take the same approach. In addition to selling their software on the Internet, they’ll contract with a publisher to distribute their boxed software in stores, often under a different brand name.

(3) Market research

Procter & Gamble did a lot of market research. And Ogilvy believed that they created products that were better – and were perceived to be better – than competitive products. In addition to surveying potential buyers before creating a new product, P&G also did extensive test marketing. They would rather be right than first. This philosophy seems to contradict today’s wisdom that being first to market a new category of product is the most important factor in a company’s potential success.

It would seem that Apple has followed P&G’s example. Many years after the first computer tablets were introduced, Apple launched the iPad. By waiting, and by designing a tablet that people would genuinely want to use, Apple revived a tired old concept and turned it into a marketplace success.

(4) Advertising

advertising and microISV competitionOgilvy pointed out that P&G’s ads stressed one key benefit. If they wanted to stress two important benefits, they would run two separate ads (versus stressing two benefits in a single ad). Most microISVs’ advertising is found on their websites. And most software developers’ websites present a library of information about their applications’ benefits and features. Perhaps developers would have more success if they followed P&G’s lead, and spent most of their time emphasizing a single benefit.

P&G’s commercials spoke directly to consumers. Many microISVs have been taking a similar approach by writing their websites’ sales messages in the second person. This means speaking directly to prospects, with lots of “you” and “your” and “you’re” words. In contrast to this conversational approach, other developers talk in the third person about their products, and occasionally mention “the user” as some abstract person who buys their software. Clearly, P&G’s speaking directly to potential customers is a more effective way to do software marketing.

P&G used unknown actors in their commercials. Compare that with today’s practice of getting celebrity endorsements from Hollywood stars, famous musicians, and sports heroes.

While it seems that P&G’s products were on television day and night, Ogilvy pointed out that less than one third of P&G’s advertising budget was allocated to prime-time advertising. Perhaps there’s a lesson there for software developers: If you’re buying search engine words, you don’t have to limit yourself to Google. If you’re buying text or banner ads on download sites, you don’t have to only buy from the highest-traffic sites.

(5) Product names

Procter & Gamble’s product names, Ogilvy pointed out, were short and simple. Today’s list includes Cascade, Cheer, Comet, Crest, Febreze, Gillette, Olay, Clairol, Ivory, Tide, and Pringles.

When they advertised their products, P&G never named their competitors. Rather, they would use a phrase such as “the other leading detergent.” Some software developers name their competitors in their websites’ sales presentations. For example, some microISVs create feature-comparison tables that show their applications’ features and benefits side-by-side with competitive products. And some developers offer competitive upgrades for customers who abandon an alternative product in favor of their own.

microISVs sell software with benefitsShould microISVs include the names of their competitors in the sales presentations on their websites? It depends. In some jurisdictions, it may not be legal to mention competitive companies or products. Where it’s legal, developers might try it both ways, and compare sales results.

(6) Talking about benefits

Ogilvy mentioned an interesting attribute of P&G’s advertisements that might have implications for microISVs: P&G showed consumers how the product will benefit them, without explaining why it might benefit them. Their ads promised softer skin, or a happier social life, and other benefits, tangible and intangible. And the reader or viewer of the ads was left to figure out how the products’ features would lead to these benefits.

Often, product users were portrayed as benefiting emotionally from using P&G’s product. And seldom did a P&G ad connect all the dots. Prospects were on their own to figure out how P&G’s consumer products would deliver all of their benefits.

Most marketers believe that advertising is more successful if you can offer – and prove – a specific, quantifiable benefit. Again, choose the approach that makes the most sense to you, and measure the results. Change your sales message, and measure again.

The bottom line

How do you beat a well-funded, well-known company like P&G? Or to bring the question closer to home, how can a microISV beat a well-funded, well-known software publisher? Take advantage of your strengths. You can move much more quickly than a large company. Once a microISV identifies an opportunity, it’s easier to allocate resources to working on the new development project.

And learn from Procter & Gamble. Bring their successful design, advertising, and marketing ideas to the software development industry, and sell more software.

– by Al Harberg, the Software Marketing Glossary guy

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