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Wednesday, December 31, 2008

Trade Shows and the Recession

Take a look around you. The industry is in the worst depression in history. After a dismal 2008, capital spending will be down 20-30% in 2009 and 2010 seems a lot a farther than 365 days away. Customers are consolidating and new fabs are not getting built. Top tier suppliers are dropping employees by the busload. Fab capacity is rising. Companies are going under; careers are being lost.

So, what you should do with your marketing and trade show budget? Cut it to the bone right? Save money, save people. Hunker down and live to fight to another day, right?

Not so fast.

Professor John Quelch of Harvard Business School says in an article, “How to Market in a Recession”:

“This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times….”

The fact is the market doesn’t care about the macro business environment. Buyers are people just like you and me who make decisions and form opinions based on the same criteria they always use. During a recession, they may not have as much money to spend, but they are still forming judgments about you and your competitors. When they do buy, their judgments and opinions will be used to pick winners and losers. They will form these opinions based upon your sales pitch, your data sheets, your reputation, your product positioning, your pricing, and a lot of other things. They will form these opinions with or without trade shows. Some of the factors you can control and some you can’t.

During tough times, you can exclusively rely upon your great products and technologies and assume your customer will use the exact feature/benefit calculations as your product planning team. You can rely upon your sales people and assume they are better than your competitors. Who needs marketing? It’s a recession and we can’t afford it.

But smart business people know that products without marketing are commodities without margins. You better be the low cost producer or go home.

Marketing is the active process of differentiating your products in ways that are understandable and meaningful to your customers. Sales people alone can’t deliver differentiation. Technology alone can’t deliver differentiation and neither can company reputation. Smart companies that invest in product differentiation are also usually the ones who make sure they are telling their customers about the value of the diffentiation in creative, compelling and convincing ways. Usually this means more than a Powerpoint sale spitch and email price negotiation. That;s how you sell salt, not advanced technology.

So what’s the best way to deliver meaningful, margin-creating, share-building differentiation in this industry?

Don’t know. It depends on the product, the company and customer.

But I do know what happens to trade shows during a recession?

The weak competitors fall away. Good firms exhibit and pick up business.

Wednesday, December 03, 2008


I am writing from Day 2 of SEMICON Japan and it’s a beautiful day with Mt Fuji out my window. You would hardly notice there is world economic crisis going on.

While the industry slump is omnipresent, the aisles are packed and some encouraging news about the economic rebound has been heard in a few, isolated places. During the Market Symposium, both iSupply and Bill McClean of IC Insights were optimistic that the eventual rebound will start mid 2009. This outlook was shared by Masashi Marumachi, Corp SVP at Toshiba and Frank Huang, Chairman of Powerchip. McClean is especially optimistic on the second half recovery start, seeing low oil prices, coordinated global economic stimulus, low inventories, and historical precedents as solid indicators. This is considerably better outlook than some doomsayers who suggest the upturn won’t occur until 2010.

Some data on SEMICON Japan:
1476 exhibitors (1548 in 2008, a record year)
4450 booths (down from 4602 in 2008, again a record)

Several exhibitors have reduced expenses by limiting the number of tools exhibited and many exhibitors have reduced staff attendance (especially international exhibitors).

Still too early too predict visitor attendance. Probably down 10%. Web traffic is up 25%; maybe folks who aren’t here are vicariously attending through the Internet.

While the business climate has dampened the mood, innovation is on the move with many product announcements, especially TSV, mask making, flip chip, metrology.
SI featured a few.

As always, the Semiconductor Technology Symposium has diverse and outstanding content. All key segments of the industry are covered with full-day and half day programs. This is enabled by a great facility at Makuhari (deep content requires lots of rooms) and the great contributions from the active participation of many committees.

What I am most proud of in the programs is how they draw upon what you should know, what you need to know, and what you what you like to know but don’t have leading edge understanding of the most advanced scientific and engineering concepts in the world today.

What you should know is best illustrated by the outstanding keynotes on sustainability and the industry’s role in combating climate change.

What you need to know are the latest products and solutions that can be used to solve real production and design challenges in today’s fabs.

And what you would like to know is how the winners of the 15th annual STS Awards for outstanding technical presentations will affect your company and business.

This combination of industry advocacy, updates on the latest advances in equipment and material solutions, and advanced peer-reviewed technical papers is the mix we try to achieve to at every SEMICON. While most SEMICONs do not feature peer review technical papers, they do try to present the “what’s next” topics, developments and ideas that are just over the horizon. It’s this combination that make SEMICON so unique in the exposition world and so central to our industry.