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Marketing of High-Technology Products and Innovations Chapter 6: Marketing Research in High-Tech Markets Marketing of High-Technology Products and Innovations Chapter 6: Marketing Research in High-Tech Markets

Questions to Consider What are the challenges high-tech marketers face in gathering market-based information? Questions to Consider What are the challenges high-tech marketers face in gathering market-based information? What market research techniques are useful for incremental innovations? What market research techniques are useful for break-through innovations? © 2010 Pearson Education, Inc. publishing as Prentice Hall

 What insights can empathic design generate? Who are lead users? What are the What insights can empathic design generate? Who are lead users? What are the benefits of QFD? Why is it so difficult to develop forecasts in high-tech markets? © 2010 Pearson Education, Inc. publishing as Prentice Hall

Technology Markets The Market Research Paradox: v Customers find it difficult to articulate their Technology Markets The Market Research Paradox: v Customers find it difficult to articulate their needs v High-tech firms must use market-based data to develop and evaluate their innovation ideas v Successful high-tech firms: v collect useful information to guide decisions v incorporate customer information and feedback into product development process v allocate resources to information gathering © 2010 Pearson Education, Inc. publishing as Prentice Hall

Gathering Information: Market Research Expenditures and Staffing % of Revenue # of Market Research Gathering Information: Market Research Expenditures and Staffing % of Revenue # of Market Research Personnel Pharmaceuticals 0. 78 % 52 Media Companies 0. 68 % 22 Consumer Goods 0. 51 % 18 Technology (B 2 B Sector) 0. 25 % 15 Telecommunications 0. 07 % 15 < $1 Million 0. 07 % 5 > $5 Million 0. 5 - 0. 69 % 13 -41 By Industry Sector By Company Size ($ Revenue) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Gathering Information: Aligning Market Research with Type of Innovation Survey Research Concept Testing Conjoint Gathering Information: Aligning Market Research with Type of Innovation Survey Research Concept Testing Conjoint Studies Focus Groups Incremental Innovation (need known) Market Intuition Customer-Driven Innovation Customer Visits Biomimicry Empathic Design Lead Users Quality Function Deployment Prototype Testing Breakthrough Innovation (technical solution precedes customer need) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Gathering Information: Aligning Market Research with Type of Innovation Incremental Innovation ◦ Customers needs Gathering Information: Aligning Market Research with Type of Innovation Incremental Innovation ◦ Customers needs generally known ◦ New-product developments are in alignment with the current market ◦ Use traditional research techniques Radical Innovation ◦ Difficult for customers to evaluate ◦ Use experts, future scenarios, and guided intuition © 2010 Pearson Education, Inc. publishing as Prentice Hall

Gathering Information: Aligning Market Research with Type of Innovation Mid-range Innovation ◦ Techniques based Gathering Information: Aligning Market Research with Type of Innovation Mid-range Innovation ◦ Techniques based on customer observation, lead users, QFD © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Concept Testing A technique that solicits customer feedback to Traditional Tools of Marketing Research: Concept Testing A technique that solicits customer feedback to evaluate a company’s early-stage product ideas Customer feedback is used to determine which concepts ought to be further developed © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Concept Testing 1. 2. Generate multiple product concepts/ideas a) Traditional Tools of Marketing Research: Concept Testing 1. 2. Generate multiple product concepts/ideas a) b) c) d) ◦ ◦ Observation Focus groups Brainstorming Interviews Share concepts with sample of customers Key attributes and benefits described in paragraph form Potential customers rate concepts on dimensions such as trial interest and perceived value © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Concept Testing 3. Further reduce number of concepts to Traditional Tools of Marketing Research: Concept Testing 3. Further reduce number of concepts to a manageable set ◦ Representative sample of potential customers assess finalists © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Conjoint Analysis Survey research tool ◦ Statistically predict optimal Traditional Tools of Marketing Research: Conjoint Analysis Survey research tool ◦ Statistically predict optimal combination of price and product attributes ◦ Customer sample makes judgments about preferred combinations Uncovers trade-offs in attributes/features Used to design product features to improve profitability © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Conjoint Analysis 1. § 2. § Develop attribute combinations Traditional Tools of Marketing Research: Conjoint Analysis 1. § 2. § Develop attribute combinations Use focus groups, interviews, internal expertise Present each product profile with different attribute combination to customers Customers evaluate each combination on a rating scale © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Conjoint Analysis Example: Product Profile- GPS Conjoint Study Accuracy: Traditional Tools of Marketing Research: Conjoint Analysis Example: Product Profile- GPS Conjoint Study Accuracy: 10 feet or 50 feet? Display: Color or black-and-white? Battery: 12 hours or 32 hours? Price: $250 or $350? Product Concept #1 Accuracy 10 feet Battery Life 32 hours Display Price Color $250 16 product profiles possible (2 x 2 x 2) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Conjoint Analysis 3. § Perform Ordinary Least Squares regression Traditional Tools of Marketing Research: Conjoint Analysis 3. § Perform Ordinary Least Squares regression on the data Yields consumer utility function Example: Importance Weights- GPS Conjoint Study Accuracy 9. 6 Battery Life 30. 9 Display Price 14. 9 40. 6 Accuracy is least important, price is most important © 2010 Pearson Education, Inc. publishing as Prentice Hall

Willingness to Pay for each feature: Price 40. 6 ◦ Difference between $350 and Willingness to Pay for each feature: Price 40. 6 ◦ Difference between $350 and $250 ◦ 100/40. 6 = $2. 46 value per increment of attribute Accuracy ◦ 9. 6 x 2. 46 = $23. 65 Display ◦ 14. 9 x 2. 46 = $36. 65 Battery life ◦ 30. 4 x 2. 46 = $74. 78 © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: Conjoint Analysis Use to determine product feature set and Traditional Tools of Marketing Research: Conjoint Analysis Use to determine product feature set and price Make market share predictions ◦ Predict cannibalization and substitution effects © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Customer Visit Programs Systematic program of visiting customers Marketing Research Tools for Midrange Products: Customer Visit Programs Systematic program of visiting customers with a cross-functional team to understand customer needs. Used for: 1. New-product development ideas 2. Satisfaction studies 3. New market segment identification Cross-functional teams ◦ Engineering, marketing, sales account manager © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange products: Customer Visit Programs Elements of Effective Customer Visit Marketing Research Tools for Midrange products: Customer Visit Programs Elements of Effective Customer Visit Programs 1. ◦ ◦ 2. 3. ◦ ◦ Get engineers in front of customers. Face to face communication Interactive conversation Ensure that the corporate culture embraces the value of the customer visit program. Visit different kinds of customers. Competitor’s customers, lost customers, lead users, channel intermediaries, internal personnel Customer councils (see Table 6 -3 for more details) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Customer Visit Programs Elements of Effective Customer Visit Marketing Research Tools for Midrange Products: Customer Visit Programs Elements of Effective Customer Visit Programs 4. ◦ ◦ 5. ◦ (cont) Visit customers in their own settings: Get out of the conference room! (versus bringing them on-premise for a “dog and pony” show) Field research Firsthand knowledge Inclusion of multiple decision makers Conduct programmatic visits. (not ad hoc) (see Table 6 -2 for more details) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Empathic Design Research based on discovering customer needs Marketing Research Tools for Midrange Products: Empathic Design Research based on discovering customer needs through observation ◦ “Empathy” with the user’s world Users may be unable to articulate their needs ◦ Based on anthropology and ethnography Develop deep understanding of user environment, extrapolate into future, imagine future products © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Empathic Design What a user does with the Marketing Research Tools for Midrange Products: Empathic Design What a user does with the product (not what the product can do) drives its success Types of insights A. Triggers of Use B. Unarticulated user needs/coping strategies C. New usage situations D. Customization E. Intangible Attributes © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: 5 Steps in Empathic Design 1. Observation ◦ Marketing Research Tools for Midrange Products: 5 Steps in Empathic Design 1. Observation ◦ Who should be observed? ◦ Who should do the observing? ◦ What behavior should be observed? 2. Capture the Data ◦ Less focus on words/text; more on visual, auditory, and other sensory cues ◦ Via photos, etc. © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: 5 Steps in Empathic Design 3. Reflection and Marketing Research Tools for Midrange Products: 5 Steps in Empathic Design 3. Reflection and Analysis ◦ Identify all customers’ possible problems and solutions 4. Brainstorm for Solutions ◦ Transform observations into ideas 5. Develop prototypes of solutions ◦ Tangible representation or role play/ simulation of ideas © 2010 Pearson Education, Inc. publishing as Prentice Hall

 Develop detailed “map” of how customers operate Customer scenario planning ◦ Intimate understanding Develop detailed “map” of how customers operate Customer scenario planning ◦ Intimate understanding delivery of value, customer loyalty © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Lead Users Some customers face needs before a Marketing Research Tools for Midrange Products: Lead Users Some customers face needs before a majority of the market place ◦ More extreme needs than typical customers ◦ Benefit by obtaining solutions to their needs sooner rather than later Lead users tend to innovate their own solutions to their needs ◦ Useful insights for innovation © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Innovations Developed by Lead Users User Manufacturer Computer Marketing Research Tools for Midrange Products: Innovations Developed by Lead Users User Manufacturer Computer Industry 33% 67% Chemical Industry 70 30 Poltrusion-Process Machinery 85 15 Scientific instrument s 82 18 Semiconductor-electronic process equipment 63 21 Electronic assembly 11 33 Surface chemistry instruments 82 Other 16% 18 (joint usermanufacturer) 56 (supplier) See Table 6 -5 © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Lead Users Uses information from leading edges of Marketing Research Tools for Midrange Products: Lead Users Uses information from leading edges of a market ◦ Extreme forms of problems Lead users may not be within usual customer base Systematic process to collect information (see next slide) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Lead-User Process 1. Identify important trend ◦ Via Marketing Research Tools for Midrange Products: Lead-User Process 1. Identify important trend ◦ Via standard environmental scanning 2. Identify and question lead users ◦ ◦ Use personal contacts with customers, surveys, networking with experts, empathic design Respect possible sensitivity of information © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Lead-User Process 3. Develop the breakthrough product(s) ◦ Marketing Research Tools for Midrange Products: Lead-User Process 3. Develop the breakthrough product(s) ◦ Host a workshop for experts and lead users to brainstorm 4. Assess how well lead user data and experiences apply to more typical users ◦ Gather market research from typical users © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Lead Users New insights from gathering and using Marketing Research Tools for Midrange Products: Lead Users New insights from gathering and using information in new ways Cross-functional in nature Collaboration with innovative customers Requires corporate support, skilled teams, time. © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Lead Users © 2010 Pearson Education, Inc. publishing Marketing Research Tools for Midrange Products: Lead Users © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Quality Function Deployment (QFD) What: A tool that Marketing Research Tools for Midrange Products: Quality Function Deployment (QFD) What: A tool that provides a bridge between the voice of the customer and product design Purpose: Ensure tight correlation between customer needs and product specifications Requirement: Close collaboration between marketing, engineers, and customers © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: QFD Can: Reduce design time by 40%, design Marketing Research Tools for Midrange Products: QFD Can: Reduce design time by 40%, design costs by 60% Enhance design quality Reduce time-to-market Reduce number of design changes Reduce rework Lower facility’s maintenance and operation costs Improve quality Increase customer satisfaction © 2010 Pearson Education, Inc. publishing as Prentice Hall

Traditional Tools of Marketing Research: QFD: Multistage Process 1. Collect the “voice of the Traditional Tools of Marketing Research: QFD: Multistage Process 1. Collect the “voice of the customer” ◦ Identify customer needs regarding desired product benefits via customer visits or empathic design ◦ Weight or prioritize desired benefits/attributes 2. Collect customer perceptions of competitive products ◦ Identify gaps or opportunities in the market © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: QFD: Multistage Process 3. Transform data into design Marketing Research Tools for Midrange Products: QFD: Multistage Process 3. Transform data into design requirements: ◦ “Customer requirements deployment”identify product attributes that will meet customer needs ◦ “House of quality”- a planning approach that links customer requirements, design parameters and competitive data. © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: QFD—Using the Kano Concept Satisfaction * Unknown and Marketing Research Tools for Midrange Products: QFD—Using the Kano Concept Satisfaction * Unknown and unspoken One-dimensional: Known and spoken Attractive* (Delight/Wow) Low level of attribute High level of attribute Expected: Must -be quality Known and unspoken Dissatisfaction © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: QFD—Using the Kano Concept One-dimensional attributes o o Marketing Research Tools for Midrange Products: QFD—Using the Kano Concept One-dimensional attributes o o Known and voiced by customer Linearly related to customer satisfaction © 2010 Pearson Education, Inc. publishing as Prentice Hall

 Must-be quality attributes ◦ Must be present for customer to be satisfied ◦ Must-be quality attributes ◦ Must be present for customer to be satisfied ◦ Customers implicitly expect it to be present, and therefore do not “voice” it as a need ◦ Absence of attribute associated with extreme dissatisfaction ◦ Increasing level of the attribute does not increase satisfaction ◦ Essential to product functionality © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: QFD—Using the Kano Concept Attractive quality attributes o Marketing Research Tools for Midrange Products: QFD—Using the Kano Concept Attractive quality attributes o o Exhibit an exponential relationship with satisfaction Because it is not expected (or voiced), lack of this attribute does not lead to dissatisfaction “Wow” factor Discovered through empathic design and lead users © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: QFD Summary Firmly grounds product design in customer Marketing Research Tools for Midrange Products: QFD Summary Firmly grounds product design in customer needs Allows product development team to develop common understanding of design issues and trade-offs Reveals friction points and enhances collaboration © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Prototype Testing Prototype: a model of the ultimate Marketing Research Tools for Midrange Products: Prototype Testing Prototype: a model of the ultimate (final) product/service ◦ used to illustrate the product idea in order to test customer reaction to it First: test the prototype against the technical design specifications Second: (if it meets specifications) customers evaluate the prototype © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Prototype Testing Information acceleration technique: virtual representation of Marketing Research Tools for Midrange Products: Prototype Testing Information acceleration technique: virtual representation of a new product ◦ More vivid and realistic than concept descriptions ◦ Less expensive than actual prototypes © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Prototype Testing Forces design team to: ◦ Carefully Marketing Research Tools for Midrange Products: Prototype Testing Forces design team to: ◦ Carefully define target market and core product benefits early in the process ◦ Plan for entire product line and cannibalization of existing products © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Midrange Products: Beta Testing Beta version: A pre-release (potentially unreliable) Marketing Research Tools for Midrange Products: Beta Testing Beta version: A pre-release (potentially unreliable) version of new product ◦ made available to a small number of trusted customers. Customer agrees to provide feedback from beta test ◦ An item "in beta test" is mostly working but still under test. © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation “Co-creation”, “co-production”, “DIY innovation”, “feedback-influenced design”, Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation “Co-creation”, “co-production”, “DIY innovation”, “feedback-influenced design”, “peer production” Taps collective wisdom of a community Requires radical rethinking of the innovation process ◦ R & D R & We Move away from R & D in the lab Move towards active co-creation with customers © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation Increasing prevalence is fueled by: 1. Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation Increasing prevalence is fueled by: 1. Economics of product development costs and high failure rates 2. Society’s beliefs about the role of customers in business strategy Environmental impact of products 3. Internet and Web 2. 0 technologies Time Magazine named “You” the Person of the Year for 2006 © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation Customers are willing to “donate” their Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation Customers are willing to “donate” their ideas freely ◦ Motivated by enhanced reputation and network effects ◦ Realize low odds of successfully commercializing their own idea © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation Yet many companies actively resist customer-driven Marketing Research Tools for Breakthrough Innovation: Customer-Driven Innovation Yet many companies actively resist customer-driven innovation ◦ Customer innovators viewed as rivals or lacking necessary knowledge/skill ◦ NIH syndrome: “Not invented here” Disparages any ideas not generated internally by the company © 2010 Pearson Education, Inc. publishing as Prentice Hall

 Paradoxically, technology companies are leading the way in harnessing customer knowledge ◦ PFE: Paradoxically, technology companies are leading the way in harnessing customer knowledge ◦ PFE: Proudly found elsewhere Requires competencies in communication, learning and collaborating with customers © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry: emulating ideas from the natural world ◦ Marketing Research Tools for Breakthrough Innovation: Biomimicry: emulating ideas from the natural world ◦ Bio = life; mimesis = to imitate Inspired by nature Tends to generate environmentally-friendly insights Biologists work with engineers, architects, and product designers to create sustainable solutions © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry in Action Namibian Desert Beetle Desert insect Marketing Research Tools for Breakthrough Innovation: Biomimicry in Action Namibian Desert Beetle Desert insect that catches water under its wings Prototypes are under test for industrial applications of a revolutionary material that collects water from invisible mist, including recycling water lost by the evaporating cooling towers used by AC systems. Humpback Whale Scalloped flipper proved to be a more efficient wing design in wind tunnel experiments Potentially optimize airplane wings, helicopter rotors, propellers, and ship rudders for improved safety maneuverability, and fuel efficiency Mussels Glue that anchors them firmly to a rock May prove useful to the private marine industry, medical and dental fields, perhaps to repair shattered bones Locusts Ability to fly in dense swarms without colliding Anti-collision devices in cars (More details in Table 6 -8) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Biomimicry Design Spiral Challenge to Biology Identify Evaluate Real Challenge Against Life’s Principles Interpret Biomimicry Design Spiral Challenge to Biology Identify Evaluate Real Challenge Against Life’s Principles Interpret Design Brief Emulate Discover Nature’s Strategies Abstract Natural Models Design Principles © Biomimicry Guild, 2008 © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 1. Identify the problem to Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 1. Identify the problem to be resolved. ◦ Asks a series of “why” questions to open the process for creativity in innovation. 2. Interpret the problem in nature’s terms. ◦ ◦ “Biologize” the issue Ask: how does nature achieve this function in the environment? © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 3. Discover the best natural Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 3. Discover the best natural models that answer/resolve the challenges. ◦ Identify as many solutions as possible from organisms in nature that offer either literal or metaphorical solutions to the problem © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 4. Abstract from the examples Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 4. Abstract from the examples in prior step to identify patterns ◦ Clustering techniques, such as Venn diagrams, graphs, and visual representations can be helpful ◦ Oftentimes requires the assistance of biologists and other scientists trained in the biomimicry method © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 5. Emulate nature, apply the Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 5. Emulate nature, apply the ideas and solutions to the challenge at hand. ◦ ◦ The heart of the design phase Solutions can mimic forms, processes, ecosystems © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 6. Evaluate and continue to Marketing Research Tools for Breakthrough Innovation: Biomimicry: The Process 6. Evaluate and continue to improve the design. 7. Begin the process anew. ◦ Constant learning, adapting and evolving. © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry Benefits Sustainable Perform well ◦ Nature has Marketing Research Tools for Breakthrough Innovation: Biomimicry Benefits Sustainable Perform well ◦ Nature has been evolving designs for billions of years Save energy Cut material costs © 2010 Pearson Education, Inc. publishing as Prentice Hall

Marketing Research Tools for Breakthrough Innovation: Biomimicry Benefits Redefine/eliminate “waste” ◦ Mimic how nature Marketing Research Tools for Breakthrough Innovation: Biomimicry Benefits Redefine/eliminate “waste” ◦ Mimic how nature transitions materials within a habitat Define new product categories/ industries ◦ Opportunity for disruptive technologies ◦ reputation for environmental compassion Build company’s brand © 2010 Pearson Education, Inc. publishing as Prentice Hall

Forecasting in High-Tech Markets Traditional Quantitative Techniques: Time Series, Moving Averages, Exponential Smoothing Incremental Forecasting in High-Tech Markets Traditional Quantitative Techniques: Time Series, Moving Averages, Exponential Smoothing Incremental Innovation Company has previous experience Bass Model Delphi Technique Analogous Data Breakthrough Innovation “New to the Company” No closely competing alternatives available © 2010 Pearson Education, Inc. publishing as Prentice Hall

Forecasting in High-Tech Markets Qualitative Tools: Delphi method ◦ Rely on a panel of Forecasting in High-Tech Markets Qualitative Tools: Delphi method ◦ Rely on a panel of experts Analogous data ◦ Rely on similar products with a logical connection Serve similar need or share important characteristics (business factors for success, etc. ) © Mohr, Sengupta, Slater 2009 © 2010 Pearson Education, Inc. publishing as Prentice Hall

Forecasting in High-Tech Markets Bass Model ◦ Forecasting sales of a new technology for Forecasting in High-Tech Markets Bass Model ◦ Forecasting sales of a new technology for which no closely competing alternative is available Based on diffusion theory- why innovations spread through markets Early vs. late adopters ◦ Mass media (important for early adopters) ◦ Interpersonal communication (important for later adopters) © 2010 Pearson Education, Inc. publishing as Prentice Hall

Cumulative Adopters New Adopters Innovators Early Late Majority Adopters Majority Laggards © 2010 Pearson Cumulative Adopters New Adopters Innovators Early Late Majority Adopters Majority Laggards © 2010 Pearson Education, Inc. publishing as Prentice Hall

 Bass model: ◦ Estimate year one adopters, total adopters ◦ Coefficient of innovation Bass model: ◦ Estimate year one adopters, total adopters ◦ Coefficient of innovation (p) ◦ Coefficient of imitation (q) Does make underlying assumptions that can affect reliability Despite seeming complexity, widely and easily used by professionals © 2010 Pearson Education, Inc. publishing as Prentice Hall

Forecasting in High-Tech Markets Hazards: Lack of historical data Difficult for customers to articulate Forecasting in High-Tech Markets Hazards: Lack of historical data Difficult for customers to articulate preferences Inflated projects from over-enthusiasm Competition from incumbent technologies Don’t confuse confidence in the forecast with quality of the information Biases due to personal/organizational desire for success © 2010 Pearson Education, Inc. publishing as Prentice Hall

Chapter Features Opening Vignette: IDEO Technology Expert: Grupthink (technology for customer feedback communities) Technology Chapter Features Opening Vignette: IDEO Technology Expert: Grupthink (technology for customer feedback communities) Technology Tidbit: Bio. Wave Power End-of-Book Case: Xerox © 2010 Pearson Education, Inc. publishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. © 2010 Pearson Education, Inc. publishing as Prentice Hall