Sculley speaks out

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John Sculley, who led Pepsi to No. 1 in market share and then headed Apple Computer Inc. for 10 years, has a thing or two to say about the current technology marketing downturn and what companies need to do to come out on top when it’s over.

After becoming Pepsi-Cola Co.’s youngest VP-marketing at age 29, Sculley went on to become the company’s president-CEO in 1977, a job he held for five years. On his marketing watch, Pepsi introduced its "Pepsi Generation" campaign, which helped push the soft drink past Coca-Cola for a time.

In 1983, Steve Jobs recruited Sculley to Apple Computer. Sculley would lead the company as chairman for a decade. During that time he gained fame for shepherding Apple’s "1984," commercial, which introduced the Macintosh. The ad is considered the most influential of the era, though it only ran once, during the third quarter of the 1984 Super Bowl.

Sculley also orchestrated the boardroom battle that led to the ouster of Jobs from Apple in 1985, amid slumping Macintosh sales. Sculley left eight years later.

After spending part of the early-1990s advising the Clinton administration on technology issues, Sculley is now a co-founder and partner of Signature 21, a New York-based technology and consulting firm.

Sculley this month shared his outlook on the technology market in an interview with BtoB at his Park Avenue office.

BtoB: What do you make of the current marketing environment? Most b-to-b technology companies have scaled back marketing. Are they hurting their brands?

Sculley: For the first four or five years that the Internet was central, businesses were amazed at what they were able to do technically. Now, we’re a lot more business savvy, and we understand that the Internet is just a cheaper, faster, better way of delivering services that are key to making businesses more efficient and to reach larger markets.

So the best companies are taking advantage of the slowdown in the economy to go back and retool themselves to get positioned for what is undoubtedly going to be a period of very good growth a few years out.

BtoB: You grew Apple’s revenues from $600 million to $8 billion. What lessons can b-to-b marketers take?

Sculley: Apple really is a marketing company as much as it is a product company. So much of the marketing extends into the styling of the products, the crafting of the advertising, the uniqueness of the PR messages. All of these things are a big part of the Apple mystique. Apple really is a company built on hit products.

It’s much like producing a successful movie. When you have a great film, you have a great success. With Apple, when it has a hit product, it does extremely well. It’s much less important at Apple that the technology be compatible with everything else. It’s more important that people look at it as something we would call a ‘necktie product,’ something that says to people, ‘This is how I want you to see me.’ When they carry a PowerBook around, it’s a sign of status, and that’s a big part of Apple’s marketing.

BtoB: How do you rate Apple’s marketing today?

Sculley: I think Apple’s marketing today is superb. It’s never been better, and I’ve never seen a company do as good a job of distinguishing itself from the rather bland technology products that everyone else is selling.

BtoB: What economic downturn marketing lessons did you learn at Apple and Pepsi, and how applicable are they today?

Sculley: What I learned is that when you see a downturn, move quickly. Don’t hesitate. Make your reductions fast. Focus on the core skills and investments that are essential for the long term. And anything else that you can cut out, cut it out, because downturns are very, very painful, and there is no luxury to be able to carry the extra burden that companies like to do in better times.

BtoB: What mistakes are computer company marketers making today, especially with regard to their b-to-b audiences?

Sculley: We learned at Apple years ago that the total cost of ownership far exceeded the actual cost of the product, so that the Macintosh might have a retail price of $2,000, [but] might have a total cost of ownership of $5,000 or $6,000 with the support and software and other services that were required to make it functional for a business person.

I believe that PC companies need to focus on the total cost of ownership and look at their business not just as selling a product, but selling a service and looking at the lifetime value of the relationship with that customer.

They need to find ways to make the experience better through CRM services or through other ways of simplifying the experience of ownership.

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