Thursday, June 09, 2005

Differentiation by Direct Response Marketing

Differentiation for ASIC providers by Direct Response Marketing

In a world where everything is becoming commoditized, the key to success becomes differentiation. That's becoming more difficult to achieve, and one of the reasons is that it's relatively easy to put up a Web site.

An entrepreneur is looking to find an ASIC provider. An Internet search for "Application Specific Integrated Circuit" produces 2 million+ hits, but Open-Silicon nor eSilicon or LSI or IBM are listed on the first page. Given the fact that there are major well established companies and startups which offer ASICs, It is a huge challange to build a substantial differentiation on Internet. Even when a potential customer looks at the company’s website, they are all just about the same. So what's going to make a startups plan stand out and succeed?

Perhaps the biggest differentiation in building an ASIC business is service. That retains customers, gets them to buy again and inspires them to become apostles for you. If the service is exceptional, they may even become customer champions-one who would market for you.
But what kind of differentiation helps you acquire customers in the first place if your product or service appears to be a commodity?

Offer - You can differentiate with your offer.

Outstanding offers are a means of differentiation that tie to the product or service. They'll raise your response rate considerably, but expect lower conversions and less loyalty.
Unusual guarantees are differentiating. By offering on time delivery guarantees or first time silicon success guarantee, your offer stands out. Offering Lifetime RMA support are even more clutter-busting.

Since ASIC is a product and a service, the offer involves a tie-in to a product, service or IP (Intellectual Property) that stands out by itself. Partnering with TSMC or ARM or IBM or Synopsys could make a big difference in your success in acquiring customers.
You may also want to consider partnering with other service providers - a non-compete agreement which can generate a portion of revenue to the alliance partnet instead of diverting it to other competitors. For example, ASIC vendor can partner with a firmware developer or a design service house. That puts a "complete solution" spin on the company, and it is differentiating. But it won't necessarily increase response rates. But creates a strong differentiation for the firm in marketplace.

Media - Media utilization may be differentiating in a few senses. Obviously, if you are in media that your competitors aren't using, you stand out. Again, that doesn't mean higher response—sometimes when you pioneer new media which reaches your customer, you're reaching your audience in an effective way. However, in ASIC world, all competitors are using all the popular media and utilizing a new media can be easily copied.

Media weight - Media weight i.e., advertising, certainly differentiates. The question is what does it do to cost per acquired customer? If not handled smartly, it can skyrocket acquisition costs. ASIC marketers, can use the press releases and technical conferences lower their acquisition costs and get a substantial differentiation.

Markets - Targeting markets which the competitors are not targeting is highly differentiating. However, this may backfire if that is niche market. In general, having competition in the market helps business - but makes differentiation difficult.

Creative - You can also differentiate with your creative. This can't be self-reflexive creative, calling attention to itself. It has to be creative that makes prospects/customers heroes in an unusual way. Dangerous as it is, humor can also work to differentiate when there's a commodity product or service involved. Humor in technical world works less effectively than fear. Fear or challenges of deep sub-micron design, uncertanity of integrating diverse types of 3rd party IP can be used creatively in the message statement.

Away from the direct response arena, however, creativity rules. Because of the way it is done and the weight it is given, it works. When you receive a innovative email, you have a different attitude toward it.

So what does our ASIC startup do to differentiate hisoffering? It surely will involve media, a tie-up with a premier partnet, an unusual guarantee perhaps? And thats when marketing's real work begins.

1 comment:

Sofia Sana said...

I too agree with you thatOutstanding offers are a means of differentiation that tie to the product or service. They'll raise your response rate considerably, but expect lower conversions and less loyalty.
Unusual guarantees are differentiating. By offering on time delivery guarantees or first time silicon success guarantee, your offer stands out. Offering Lifetime RMA support are even more clutter-busting.

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