Closed Vs. Open – 2 Roads To Market

May, 2012

Development
Most companies fit into one of two camps; closed architecture (promoting 'own brand' only) or open architecture (offering APIs to other products). Here we compare and contrast the two approaches.

Sytel has identified two laws of marketing! We can’t be sure but we suspect that most companies fit into one of two camps:

  1. Closed architecture mode (locked-down!)
    If you are a major player in any market – and we do mean major – then our first law of marketing says that you grow as follows:
    1. get yourself a well-recognised brand
    2. preach the gospel of big brand security
    3. leverage your brand by marketing related products and services
    4. make it clear to your customers that they should buy the new products and services you offer, not just because of brand security, but because… well, if you don’t, then things won’t work properly.Point iv. is key, and one that we are all easily seduced by. Your writer speaks as someone who has been rummaging through his local DIY store looking for an “approved part” for his grass trimmer. Non-brand ones look OK and are cheaper, but do I want to take the risk?
  2. Open architecture mode
    If you are not a really major player, then there may be nothing to stop you establishing a good brand name for yourself, but that may not be enough to win over some of the customers you would like to tackle.You have a great product. What do you do? Well our second law of marketing is of course radically different. You still work hard at differentiators that make your product stand out. But instead of excluding other vendors, you welcome them with open arms.

    Here’s how:

    1. remember that no vendor can ever hope to provide best of breed for all customer requirements; so be prepared to welcome best of breed partners on board
    2. provide open application programming interfaces (open APIs); not just one but probably several, to cater for all preferences
    3. since your product is going to be be integrated with other product, make sure that a support process is defined that makes trouble shooting easy; not just in theory, but in practice
    4. go out of your way to offer integration help to other vendors, and don’t think you always have to charge for it

Most worthwhile customers are risk-averse. If you can follow guidelines like this and make a virtue of them, you might be pleasantly surprised at the reception you get in the marketplace.

And in doing so, spare a thought for the followers of our first law of marketing! When the accent is on brand management and market control then innovation suffers. And eventually innovation is of course the only thing that matters.