Marketing strategies for product software

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Marketing strategies for product software assist software firms to determine the type of market analysis that is needed for decision-making. Two general strategies that are well known in the marketing discipline are:

"Marketing mix" is the typical strategy for traditional mass marketers of product software in competitive markets. Structured market research, and agility in reacting to sales, are characteristic of their product development process (Alajoutsijarvi et al, 2000). An example would be Electronic Arts, with their various home computer software games, which are advertised on television and sold in many electronic stores.

"Relational marketing", also known as relationship marketing, is used by product software companies who focus on long-term customer relationships (Alajoutsijarvi et al, 2000). An example of this is SAP, which offers enterprise resource planning systems, along with support (since the software is complicated to install). Maintaining customer relationships helps sell additional modules and future upgrades.

Broethers and van't Kruis explain two other strategies that are important to the growth of software firms:

  • a service-based strategy; and
  • a different marketing channels strategy.

Information about customer preferences, observations of customer reactions, and knowledge of past mistakes are important for the "service-based strategy". "Different marketing channels strategy" tries to discover non-traditional marketing channels to help increase distribution of software products to other target markets that take advantage of positional differences. "Alliance-based strategies", on the other hand, are helpful at providing knowledge exchanges, opening previously inaccessible markets (such as export markets), and an overall larger market access (1997).

Besides helping with current strategies, market analysis can improve future planning and growth strategies that are helpful in product roadmapping decisions. It also helps discover areas where "complementary product development" and "diversification strategies" can be profitable. Complementary goods can be in the form of other software products, hardware, or services, such as consultancy, user training, and customization (Rao & Klein, 1994). The development of these goods increases the opportunities for companies in the software market (Sengupta, 1998). Even complementary products from other vendors can lead to an increase in the value of the original product, while reducing the time to market (Messerschmitt & Szyperski, 2004).

The complementary product strategy adds value by showing innovation, and creates a multiplier effect on the original product (Sengupta, 1998). Investing in other products and services aids in diversification, which can increase the overall customer base, and helps decrease the risks of being overly specialized (Rao & Klein, 1994). Diversification can, therefore, increase the financial health of the company. An example of this is Microsoft, which has increased the sales of its primary operating system software by offering products, such as word processing, and media player software.

[edit] References

  • Alajoutsijarvi, Kimmo, Kari Mannermaa, and Henrikki Tikkanen. Customer relationships and the small software: A framework for understanding challenges faced in marketing, Information & Management, Volume: 37, Issue: 3 (April 01, 2000), pp:153-159.
  • Brouthers, Keith D. and Yvette M. van 't Kruis. Competing in Software: Strategies for Europe's niche businesses' long range planning, Volume: 30, Issue: 4 (August 1997), pp: 475-476 & 518-528.
  • Messerschmitt, D. G. and C. Szyperski. Marketplace Issues in Software Planning and Design, IEEE Software, Volume: 21, Issue: 3 (May/June 2004), pp:62-70.
  • Rao, P.M., and J. A. Klein. Growing importance of marketing strategies for the software industry, Industrial Marketing Management, Volume: 23, Issue: 1 (Februari 1994), pp: 29-37.
  • Sengupta, S. Some approaches to complementary product strategy - An introduction to the special issue, Journal of Product Innovation Management, Volume: 15, Issue: 4 (July 1998), pp: 352-367.
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