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How To Create a New Market — The Broadband Example

 

Markets are not static.  Whether by technology, consumer taste, regulation, or societal pressure, the products and needs shift.  Sometimes the changes are slow, but often they are very fast.  If we look back, we can see how change takes place and a new market is created.

The introduction of microwave ovens changed not only the nature and usage of frozen food but also that of refrigerators.  Fluoride toothpaste changed dentistry, recognition of the health risks of smoking stimulated the growth of electronic cigarettes, and deregulation of telephone service enabled the move from wired phones to mobile phones.

In many cases, the consumer cannot articulate a need, and often there is no need. Furthermore, the changes can interlock to accelerate growth in multiple markets.  It has long been postulated that as disposable batteries last longer or produce more power, the market would eventually decline.  That has never happened because longer lasting batteries enabled new devices and a new market—the Walkman would not have been possible without alkaline batteries.  As devices become more energy efficient, more devices can be created.

A New Market Case Study

This gives us opportunities.  To see how this development of a new market works, let’s go back to 1996.  Consumers had twenty to forty analog video channels, used dial up for the Internet, mostly at 28.8 mbps though a few had 56.6.  Phone service was primarily via copper wire based landline.  When we talked to consumers, they were happy with what they were getting.  As the CMO of US West’s newly acquired cable business, I was faced with the challenge of marketing new fiber-optic technology when consumers neither understood nor wanted it.  When asked about hundreds of TV channels, they said it would confuse them.  And when asked if they wanted Internet access 50-100 times faster, they were bewildered as to why they would want it.  So, I knew I had to redefine the entire market to create demand for a new market and get consumers to pay $200 per month instead of $50.

There was a lot of other work that went into this, including helping to create all the additional channels needed as well as hardware and software that would work with incredibly higher speeds.  For example, video on demand did not exist at the time, so we invested in technologies consumers could use.  Most important of all, however, was what we could call it.

I realized that we had to create a new category and a new brand name for this new market.  We had to rebrand Continental Cablevision since it was not going to be what people thought of as cable.  Following lots of work, I decided to rebrand it as “MediaOne” and to use the idea of a “miracle ingredient”—so beloved by P&G in the 1960s to give consumers a “reason to believe.”  We needed a name that sounded technological but had no clear existing definition.  Following an exhaustive search, we found the word “broadband,” which was then a rarely used word in radio.  It did not then and still does not have a formal definition for the Internet, which makes me chuckle when I hear politicians and even technical experts use it.

I had to work hard to convince top management that this would be the way to go.  I convinced everyone, so I rebranded the company as “MediaOne,” and launched it with the new services and used the slogan, “This is Broadband. This is the way.

The very first commercials in the world mentioning “Broadband” featured a re-working of the Crosby, Still, Nash & Young song, “Our House.”  Eighteen years ago these were visionary commercials, offering a new market and a new view of the world—one that has come to pass today.

Subsequent follow-up :30 commercials focused on specific aspects:  “Human Capacity,” “The Future Arrived,” “House of the Future,” and “Future Vision of House.”

At the time, the reaction was shock and disbelief from the business press pundits.  Many actually called me crazy and that it would never catch on.  No one had any idea then that “Broadband” would come to define a new market and industry.  The term was so successful that it is now globally and universally used.

We were named “Marketer of the Year” in the Cable industry.  This was all accomplished in six months with the result that US West sold it two years later for $62 Billion, based on subscriber value, after having bought it for $10.8 Billion.  It was a “turnaround” of a company that was not failing but could have sunk into decline instead of into explosive value growth.  I still remember attending all the shoots and staying at the editing studio in Manhattan well past midnight to approve the commercials so that they could go on air immediately.

Transformative Leadership and a New Market

I have seen that while most companies are “maintained”—often even quite well and growing moderately—reinvention is the key to real value growth.  Leadership has to be transformative.  “Management” is not enough.  The secrets to knowing how to create a new market include:

  1. Breadth of experience in multiple industries, technologies and customer/consumer populations.
  2. Ability to tie together multiple strands of knowledge.
  3. Welcoming and embracing change with passion instead of fearing it.  This can be threatening to many, as old knowledge becomes irrelevant and new learning is essential.
  4. Looking for complete optimization of everything instead of step improvements that are never transformative.

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About Richard Guha

Richard Guha, President of Max Brand Equity and Chairman Emeritus of MENG, was President of Reliant Energy Retail, a Fortune 100 company. He started his career in Marketing at Procter & Gamble and Mars, following Bachelors and Masters degrees from Cambridge University in Chemical Engineering. Rising to General Management through several C-Level positions in Telecommunications and High-technology companies, he has also advised almost 100 Fortune 500 companies and served on the Boards of over nine successful high growth companies.

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