Inbound marketing is the aspect of marketing that most concerns the architect. The traditional role of inbound marketing comprises customer identification and needs analysis, market segmentation, and competitive analysis, as shown in Figure 10.1. An expanded view of inbound marketing could also include identifying possible new products, testing value propositions, helping to define product requirements, and even defining a business case for the product. It is important to recognize that this list originally arises from the reference case of a consumer seeking a replacement product: “Everyone knows what a red polo shirt is, and we’re creating a new red polo shirt that is better.” The job of the architect of complex technical systems is to generalize this reference model to non-consumer cases as necessary.

Of the various tasks in inbound marketing, far and away the most critical are identifying stakeholders (including customers), understanding their needs, and converting needs to system requirements. We have devoted Chapter 11 to this process, which may follow, or may run parallel to, the market segmentation and competitive analysis of inbound marketing, as described below.

In an established market, the purpose of segmentation is to group customers who have similar needs and who will respond in a similar fashion to outbound marketing, so that the firm can allocate its efforts among them. The description of the customers in these market segments can be used to create use cases for the product or system, to structure upstream customer needs surveys or interviews, or to perform downstream prototype evaluations or test advertising messages. In the consumer context, market segments were traditionally defined geographically and demographically (perhaps based on the availability of census data). Today there is increased opportunity to define them with much more granularity, in terms of attitudes, values, person­ality, and interests. Indeed, online advertising is rapidly changing the information available to marketers.

An important attribute of market segments is the size (current and anticipated growth) of the segment, because this is often used in the business case to weigh against investment. Specifically, the business case takes into consideration the size of the total addressable market, defined as yearly sales of the product assuming that 100% of the market is captured. Based on the market, the firm can speculate on the initial and steady-state penetration rates to arrive at sales volumes, against which the costs of the product development can be weighed in a business case.

Generalizing traditional consumer segmentation to complex systems is difficult. The traditional consumer context is rarely a good model for complex systems, but it is frequently used nonetheless. Estimating the size of the total addressable market is an excellent case in point. For some complex systems, the problem is somewhat easier because there are very few potential customers who have the need and can afford the purchase price (this would be true of military attack helicopters or 200-MW gas turbines, for example). However, most complex systems compete in markets that are more difficult to predict. History is full of examples where the market was mis-estimated by two orders of magnitude (up and down!). Especially in capital-intensive industries, a factor of 2 can represent the difference between product success and failure.

Consider the challenge of predicting the market for optical communications equipment in the satellite market. Optical communications has been cited ^[6] as the next technological step beyond radio for in-space communications between satellites, as well as between the satellites and ground stations, offering much higher data rates with lower equipment mass. The underlying markets served are governments purchasing communications satellites predominantly for ­military use, and commercial satellite operators providing consumer services (such as satellite television and satellite phones). Although the technology has recently been demonstrated in space, ^[7] significant uncertainty remains with respect to technological factors (such as the pointing accuracy and stability required for laser beams) and operational factors (such as how the market will respond to the constraint that optical signals cannot be transmitted between a satellite and Earth when the weather is cloudy). Furthermore, the market for the underlying services is difficult to predict; witness the challenges encountered by Iridium when the market rejected the size of its satellite phone handset.

Conducting competitive analysis is the final step of inbound marketing. One of the most common mistakes in technology-based enterprises is to assume that the technology of competitors will not improve from their current market offerings. It is therefore important to characterize the performance and features of competitive products and predict their future trends. More generally, the marketing approaches of competitors should be understood so that barriers to their success can be built into the product or plans of the enterprise. As a final note, one should not assume that competitors are bad: Their presence helps inform and educate customers and create a growing market.

As we have noted, the interaction between marketing and system architecture is critical, especially for inbound marketing. Below, we have summarized some of the important interactions between marketing and architecture.