Marketing High Technology Chapter 12 Characteristics of

Marketing High Technology Chapter 12

Characteristics of High-Tech Markets n Market Uncertainty n Technological Uncertainty n Highly competitive Market n Know-how, Complexity, and Velocity Effects n Integrating R&D with marketing n Managing Strategic Alliances n Promotion to Alleviate Customer Uncertainty

Crossing the Chasm Tornadoes and High Growth

The Technology Adoption-Diffusion Cycle Bowling Alley Main street

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

Cracks in the Adoption Cycle Tech enthusiasts Visionaries Pragmatists Conservatives Skeptics

Differing Goals in the Chasm n Early adopters looking for change agents. n Early majority looking for a productivity improvement n So, early adopters not good reference points for early majority customers

Technology Languishing in the Chasm n DSL n IP telephony and videoconferencing n Voice processing for dictation n Electronic books n Interoperability with television n GPS

The Case of Artificial Intelligence n 1980 s: brains in a box n n Intellicorp, Symbolics - pioneers Customer list from Fortune 100 – early adopters n Today: languishing in the chasm n n Lack of support for mainstream hardware Didn’t integrate into legacy systems Few people who could implement it Hidden in terms like object-oriented programming and expert systems

Successfully Negotiating the Chasm

Moore’s Zen Proverb First there is a market Then there is no market Then there is Geoffrey Moore

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

After the Chasm The good news and the bad news

There are some losers in a Tornado n VHS v. Betamax n n n Sony refused to license Couldn’t meet demand vendors circumvented Sony n Word Star v. Word. Perfect n Word Star introduced a new product in middle of tornado

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

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

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

Lesson: Cannibalize Your Market n Wall Street Journal Online– killer app ahead of its time n Charles Schwab - - discount online brokerage n Cannibalize the market, not the brand

Vertical Positioning Pyramid Least Costly to Buyer Most Costly to Seller

Innovation Marketing Matrix Customer Groups

Understanding Customer Needs n Cost/benefit Analysis n Compatibility with Existing Technology n Difficulty of Use n Readily Identifiable Benefits n Ability of Benefits to be Observed

Collecting Market Intelligence n Delphi Method – qualitative n Panel of anonymous experts n Substitute Products n Triangulation n Approaching demand from three perspectives

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

The Marketing Plan n Purpose n Value proposition n Target market n Market niche n Marketing tactics n Company’s identity

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

Take-Aways n Add students’ comments here