Marketing High Technology

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Marketing High Technology

• Chapter 12

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Characteristics of High-Tech Markets

• Market Uncertainty
• Technological Uncertainty
• Highly competitive Market
• Know-how, Complexity, and Velocity Effects
• Integrating RD with marketing
• Managing Strategic Alliances
• Promotion to Alleviate Customer Uncertainty

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Crossing the Chasm

• Tornadoes and High Growth

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The Technology Adoption-Diffusion Cycle
Bowling Alley
Main street
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Characteristics of A-D Segments
 Innovators Early Adopters Early Majority Late Majority Laggards
Want the highest performance available Want to be leaders Want to stay ahead Don't want to fall too far behind Reluctant to make change
Best informed, most profitable, most independent Want to see it done once before they buy it Want to buy from established accessible suppliers Want no glitches Want a thouroughly proven performer Most fearful of new technologies
Will buy an unproven concept Among the more profitable firms Must be easy to buy and easy to incorporate Buy on price above all Least informed about their business
Eager for new solutions, want to be leaders Interested in new solutions Want to know you have sold lots of it Want to buy locally Adopt innovations when they can be avoided no longer
Don't need to see it done to buy it Hesitant to be the very first to buy Watch the Early Buyers Demand absolute simplicity of purchase and use Often the least profitable
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Cracks in the Adoption Cycle
Tech enthusiasts
Visionaries
Pragmatists
Conservatives
Skeptics
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Differing Goals in the Chasm

• Early adopters looking for change agents.
• Early majority looking for a productivity
  improvement
• So, early adopters not good reference points for
  early majority customers

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Technology Languishing in the Chasm

• DSL
• IP telephony and videoconferencing
• Voice processing for dictation
• Electronic books
• Interoperability with television
• GPS

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The Case of Artificial Intelligence

• 1980s brains in a box
• Intellicorp, Symbolics - pioneers
• Customer list from Fortune 100 early adopters
• Today languishing in the chasm
• Lack of support for mainstream hardware
• Didnt integrate into legacy systems
• Few people who could implement it
• Hidden in terms like object-oriented programming
  and expert systems

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Successfully Negotiating the Chasm
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Moores Zen Proverb

• First there is a market
• Then there is no market
• Then there is
• Geoffrey Moore

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Execution

• Use opinion leaders
• Reduce the risk of adoption
• Be a gorilla (Geoffrey Moore)
• Focus on a particular application-dominate 1-2
  niches

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After the Chasm

• The good news and the bad news

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There are some losers in a Tornado

• VHS v. Betamax
• Sony refused to license
• Couldnt meet demand
• vendors circumvented Sony
• Word Star v. WordPerfect
• Word Star introduced a new product in middle of
  tornado

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Lessons from the Tornado

• Attack the competition ruthlessly.
• Expand the distribution channel as quickly as
  possible.
• Forget the customer
• Focus on the process above all else
• Extend distribution to every type of outlet
  possible

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Lesson Drive to the next lower price
point-Hewlett Packard
10,000 customers
2 million customers
15 million customers
HP 1,000
HP 500
HP 299
Introduce new product
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More Lessons

• Have good partners in place before entering the
  tornado
• Bundle products with partners so customers buy
  more than one product.
• I.e. Microsoft Office Suite

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Lesson Cannibalize Your Market

• Wall Street Journal Online killer app ahead of
  its time
• Charles Schwab - - discount online brokerage
• Cannibalize the market, not the brand

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Vertical Positioning Pyramid
Least Costly to Buyer
Most Costly to Seller
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Innovation Marketing Matrix
Customer Groups
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Understanding Customer Needs

• Cost/benefit Analysis
• Compatibility with Existing Technology
• Difficulty of Use
• Readily Identifiable Benefits
• Ability of Benefits to be Observed

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Collecting Market Intelligence

• Delphi Method qualitative
• Panel of anonymous experts
• Substitute Products
• Triangulation
• Approaching demand from three perspectives

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Pricing High Technology Products

• Defining the components of price
• Cost of producing
• Overall price strategy
• Promotions and discounts
• Degree of standardization or customization
• Profit required
• Margins in the industry
• Converging on a price point through triangulation
• Constructing a pricing strategy

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The Marketing Plan

• Purpose
• Value proposition
• Target market
• Market niche
• Marketing tactics
• Companys identity

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Promoting

• Tell a compelling story
• Why you?
• Why now?
• How will you change the world?
• Preannouncements
• Develop a brand presence

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Take-Aways

• Add students comments here