Marketing and Business Strategy

Dealing with the Press -4

Use top management. At most companies, top management pays attention to press coverage only when the coverage is negative or when the competition receives a lot of positive coverage. I believe top managers should play a more active role in press relations-and marketing in general.

At most companies, especially small, technology-based companies, the personality and culture of the company can be traced to the management team. As the company grows, and marketing plans proliferate, that corporate personality often fades. Top managers are then the only ones able to communicate the corporate character and ideals. They are the only ones who can offer a simple, unified view of the total corporation.

If you put layers of people between company management and the journalist, the journalist will never get a true sense of what drives the company. If, on the other hand, top managers would meet on a regular basis with journalists, financial analysts, and employees, everyone would benefit. Each group would come away with a better understanding of the other’s positions. There would be less likelihood of misunderstanding and distrust and surprise. It’s a job that no public-relations agency can do without top management’s help.

Putting It All Together
Several years ago, a well-known industrialist told me that all business success is based on two things: building relationships and patience.

Nowhere is this more true than in market positioning. None of the market-positioning activities-using word of mouth, developing the infrastructure, forming strategic relationships, selling to the right customers, dealing with the press-will guarantee success by itself. And none of them will bring success overnight. It takes a long time to establish contacts and build relationships.

But taken together, and given enough time, these elements are almost certain to work. They will bring recognition and credibility to a company and its products. It might take a while, but it’s worth the wait.

Dealing with the Press -3
Develop long-term relationships. Developing good relationships with the press takes time. Press relations is a process not an event. Pressing the media for an immediate article will rarely succeed. Most major business stories take months, even years, to evolve. Companies must be patient.

Companies should view press relations as a continuing investment. It will pay off with time. Once you establish good relationships with the media, you will be able to present new products more effectively. Moreover, you will be able to participate in broader articles about industry trends, and you will become less susceptible to speculative stories. Journalists will seek your side of the story before going to press.

Look beyond products. In new industries, the press typically focuses on products. The stories are generally naive and superficial. Most of the coverage comes from the trade press. But as an industry matures, so does press coverage. Journalists learn, question, dig into the “news behind the news.” The business and general-news media become increasingly interested. Companies must deal with the business and general-news media differently than they deal with the trade press. There should be much less emphasis on product performance and characteristics. Seasoned journalists know a technological advantage is short-lived.

Companies should explain how they fit in the present and future business environments. When products are discussed, they should be placed in a broader context, such as “The Office of the Future” or “The Factory of the Future.” The press is fascinated by glimpses of what lies ahead.

Be honest about bad news. When bad news strikes, it’s not worth fighting the press over it. As a politician once told me: “Never pick a fight with someone who buys his ink by the barrel.” Being honest scores points with the press. In negative situations, a company’s character and style will greatly influence how the press perceives and writes about the company.

It almost never makes sense to hide bad news. It is best to get the bad news out, so it’s over and done with. If you try to hide the news, it will fester and go on forever. Three Mile Island is a classic example. The Nuclear Regulatory Commission withheld information, and public confidence sank lower and lower. On the other hand, Johnson & Johnson was very open with journalists during the Tylenol scare, and Tylenol has since regained its credibility in the market.

Dealing with the Press -2

Get the infrastructure ready. Most journalists practice what I call “he said, you said” journalism. Rather than present their own analysis, they simply quote what other people say. And who is it they quote? Most often, they quote members of the industry infrastructure-financial analysts, consultants, distributors, early customers. The infrastructure serves as a type of filtering mechanism, helping journalists separate fact from fiction.

Companies should take advantage of this filtering mechanism. They should educate and win over members of the infrastructure before going to the press. If a company tries to go to The New York Times or The Wall Street Journal without first developing the infrastructure, it could run into big problems. Reporters will go to members of the infrastructure, and the company might not be happy with what the people in the infrastructure say. Clearly, what people in the infrastructure say about you matters a great deal.

Meet with journalists one on one. Many companies build their press strategies around press releases and press conferences. But these are not the most effective ways to communicate a message. National magazines get thousands of press releases every week. It’s tough to get heard through all the noise. Many press releases are thrown out without being read.

Nor are press conferences very effective. There are two problems. First, journalists are reluctant to ask their best questions at a press conference, because they don’t want to tip off the competition. Second, different parts of the media have different interests. Byte magazine wants to hear about nanoseconds and megaflops. The newsmagazines want the broad trends and social implications. It’s impossible to satisfy everybody. There’s a lot of information, but not much good communication. A press conference is a nice spectacle, but the press loses out-and so does the company.

Instead, companies should meet members of the press individually. A one-on-one meeting takes more time, but it makes more of an impression on the journalist and it delivers the message more efficiently. Messages can be tailored for the audience: one for the trade magazines, another for the business magazines, a third for the general-interest press. Once again, the 90/10 rule applies: 10 percent of the press influences the other 90 percent. So select the most influential members of the press and meet with them.

Educate the media. Press relations should be seen as an education process. Fast-moving industries are becoming more diverse, fragmented, complex, and difficult to understand. At the same time, there is more information available about every facet of every industry. For most journalists, these industries are becoming more and more confusing.

Companies need to help journalists create order out of the chaos, so journalists can present a cogent description of emerging trends and technologies. Rather than simply pitching ideas to the press, public relations people must be willing to spend time and educate the press. Companies should treat journalists as well as they treat their major customers. It’s not enough to hold a new product up to a press conference of 600 people and say: “Here it is.”

Dealing with the Press -1

Successful press relations requires time, planning, and constant reinforcement. It rests with an understanding of how journalists work and how information is communicated. I have put together a set of guidelines that can be useful in developing an effective public-relations strategy :

Understand the journalist’s role. Journalists value their role as independent observers. They resent companies that try to blatantly influence them or co-opt them. They do not want to be viewed as an extension of the company’s promotional efforts. The notion that a story is free advertising is degrading to the journalist and to journalism.

Companies must present information without trying to manipulate. Manipulation can be counterproductive. Litronix, which sold light-emitting diodes in the early 1970s, learned this lesson the hard way. The company saw its sales starting to turn downward, and it decided an article in Business Week would help revive the business. Sure enough, Business Week was interested in an article. But the headline read: “Burnout of a Star.”

Don’t go to the press too early. Obviously, no one wants negative press coverage before a product is even introduced. But positive coverage can be almost as bad. A favorable article while the product is still in development might build expectations that are difficult to meet. If problems crop up and slow the development cycle, as so often happens, the whole world will know.

Synapse Computer ran into this problem. Synapse had impressive credentials. Started by a group of engineers from Data General, the company planned to build “fault-tolerant” computers that would never break down. They had an excellent chance to succeed in the market. But they had the itch to tell the world they were great before they actually were. Even while still working in the back of a candle factory, they began running ads and talking to the press. Expectations rose. Then, Synapse’s computers ran into technical problems at the beta sites. Nothing that abnormal, just typical beta-site problems. But Synapse was very visible now. Journalists were watching Synapse, and they reported on the company’s problems. Synapse’s credibility sank like a rock. Whether or not it solved the technical problems, Synapse faced an uphill struggle.

Don’t “imprint” the wrong image. When a baby chick is born, it looks around for its mother. If the first thing it sees is a human, it assumes the human is its mother, and its mind will never be changed. This process is called “imprinting.” Customers often act the same way. When a startup company introduces its first product, customers will form an image of the company, and that image is very hard to change. In short: You never have a second chance to make a first impression.

3Com, a small company that develops communication networks for computers, managed to avoid this problem by being patient. The company developed the first personal-computer network compatible with Ethernet, the industry standard for larger computers. But 3Com faced a promotion dilemma. Not all pieces of the network were ready at the same time. It wanted to introduce each piece-the software, the controller, the transceiver-as it was ready, so it could start receiving revenues and gain market experience. But the company didn’t want to be perceived as a component company. It wanted to be seen as a full-systems supplier. With our advice, 3Com waited until all pieces were in place, then began communicating its message to analysts and journalists. The strategy worked : The company is now firmly positioned as a systems supplier.

I put this section last because it should come last. Too many companies think press relations come first. They want to make a splash in the press even before they position their products. They think that a good article in Business Week or Fortune or The Wall Street Journal can create their markets and solve their problems. They believe a strong media campaign can make up for deficiencies in product quality, customer relations, and other basic marketing skills.

These ideas are totally backward. Press relations cannot change reality. Press relations do not create what you are; they reflect what you are. Press relations cannot take the place of a broad-based marketing strategy. Companies must first position themselves and establish themselves in the marketplace. Then, and only then, should they worry about getting press coverage.

Now that I have deflated the importance of press relations, I should emphasize the flip side: When handled properly, press relations can be a valuable part of a company’s marketing strategy. Indeed, a company is unlikely to succeed without good press relations. A company can lose in the press and still win in the market in the short term, but that can’t happen in the long term.

Press relations do not have to be all “fluff.” They are serious business. Once a product is positioned, press coverage can help reinforce and broaden the credibility that the product and company have already gained. The press can ease customer fears and make customers feel more secure about new technologies. In new and fast-growing industries, journalists can play the role of evangelists. They can preach the new technology.

Advertising can perform many of the same functions. But press relations is usually more effective and credible. Articles in the media are perceived as more objective than advertisements. If a company can win favorable press coverage, its message is more likely to be absorbed and believed.

Press relations serve a second purpose: They can provide a company with valuable feedback. Communications is a two-way street. Companies can learn a great deal from journalists. Like analysts and other industry observers, journalists serve as a microcosm of the world at large. By talking to the right journalists, a company can learn much about how the world views its products and the company itself. This type of feedback can be invaluable as a company attempts to fine-tune its public image.

If a company has monitored the environment and thought about positioning, it should have no difficulty figuring out what message to deliver to the press. The message should evolve naturally from the positioning process. But it is not always easy to deliver that message in an effective way. Communication seems so simple. Yet, so few companies do it well.

In general, the infrastructure is most critical when the confusion in the marketplace is the greatest. If people are totally secure, they won’t ask questions. They will simply buy the best-known brand or the lowest-priced product. But when insecurity is in the air, the company most skilled at lining up the infrastructure will win in the marketplace.

As a result, infrastructure is probably more important for computers than for stereos, and more important for stereos than for cereal. The supporting infrastructure in Silicon Valley is the most sophisticated outside of Wall Street. Analysts, consultants, lawyers, distributors, bankers, and software suppliers all play key roles. Pundits and analysts don’t talk nearly as much about new cereals as they do about new computers.

So how can a company line up a supporting infrastructure? I recently talked with a group of junior marketing people at a successful personal-computer company. They told me about their plans to use public relations to create consumer demand for their product. I told them that their plans were bound to fail. Traditional public relations is not enough. Public relations can get your product mentioned in Time magazine once a year-if you are lucky. That won’t create much demand for a product.

Instead, marketing people must work at identifying and lining up the key members of the infrastructure-and keeping track of how the infrastructure is changing. In the computer business, they must identify the luminaries, the key people in the trade press, the independent software people, then get all of them committed to the new product. They might try starting a newsletter for dealers, or running conferences for industry luminaries. They might give special demonstrations and technical support to independent software companies.

All the time, marketing managers should pay attention to the hierarchies of influence that exist within the infrastructure. Some luminaries are more “luminous” than others. When Intel introduced its first 32-bit microprocessor, it gave an extensive briefing to Gordon Bell, a well-known technology guru, then at Digital Equipment Corporation. When Fortune ran an article about the new chip, it ran a quote from Bell to back up Intel’s claims about the chip’s likelihood of success.

Certain distributors and dealers are more influential than others. K mart is an effective mass distributor, but it will not build credibility for a business computer the way Sears will. So companies would rather that Sears carry the computer, at least initially. Higher up the hierarchy are specialized retail chains such as ComputerLand and Businessland.

In the computer business, lining up the right software companies is even more important. The major “system software” companies can make it easier for the smaller software companies to develop application programs for the computer. And once the software companies commit themselves, manufacturers of add-on hardware, such as plug-in boards and disk drives, are sure to follow.

When a company is able to develop the infrastructure fully, it is almost impossible for its product to fail. The product is a certain success even before it reaches the market. Perhaps the best example is 1-2-3, the integrated software product from Lotus Corporation. Once again, Ben Rosen played an influential role. Rosen, who now heads a venture-capital fund, was the primary investor in Lotus. He began talking about the product months before its introduction. Lots of people had early prototypes. ! had one. Many magazine editors had them. We talked to each other about it and the excitement grew. We could hardly wait for the final product to hit the market. By the time of introduction, 1-2-3 was the industry’s worst-kept secret, butalso its most sure-fire success.

The financial analysts. An analyst’s favorable report on a new product can significantly improve the product’s chances of success. Where do financial analysts get their information? Some comes from the manufacturers themselves. But more comes from dealers and independent suppliers and luminaries.

The business and trade press, in turn, rely heavily on comments and recommendations of the financial analysts. I once went through a long Business Week article with a yellow marker and highlighted all the quotes from financial analysts and luminaries. When I was finished, nearly the entire article was yellow.

The spreading enthusiasm bounces up and down the infrastructure. When an influential luminary like Ben Rosen tags a product as a future leader in the marketplace, still more software companies begin writing programs for the computer. Eventually, the word reaches the top of the pyramid and the customers begin buying. It’s like a massive game of whispering down the lane, with more and more people involved at each level. Each part of the infrastructure validates the others.

The situation is similar with microprocessors. If a new microprocessor is supported with development tools, peripheral chips, and software, other semiconductor companies are more eager to act as second sources-that is, to make microprocessors based on the same design. This is very important, as few customers want to rely on a chip manufactured by a single company. Second-sourcing agreements attract the attention of industry luminaries and financial analysts, and the word continues to flow up the pyramid toward the customer.

If a company is missing any levels of the infrastructure, the whole pyramid can come tumbling down. National Semiconductor has run into this problem with its 32-bit microprocessor. The product is excellent, superior to some of its better-selling competitors. But the microprocessor has had little in the way of peripheral chips and software support.

As a result, National has not been able to build a reputation as a major force in the market.  I recently attended a board meeting at a manufacturing company deciding which micropro¬cessor to use in its next-generation products. Fully three-quarters of the discussion focused on qualitative factors. Board members were looking for a microprocessor maker they could count on for new products and support in the future. National, despite its highly advanced product, was quickly knocked out of consideration. Why? It had no history of success in the microprocessor business and little support from the infrastructure.

The infrastructure tends to be particularly important in rapidly changing industries with complex products. In these industries, there is so much going on that it is difficult for even knowledgeable people to sort out all the details. To understand the significance of new developments, people rely on what they hear from the infrastructure. No dealer is going to open shelf space for a new product without speaking to other dealers or third-party software vendors, or reading trade magazines and financial analysts’ reports.