Marketing High Technology Chapter 12
Marketing High Technology
Chapter 12
Characteristics of High-Tech Markets
Market Uncertainty
Technological Uncertainty
Highly competitive Market
Know-how, Complexity, and Velocity Effects
Integrating R&D with marketing
Managing Strategic Alliances
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 aheadDon't want to fall too far
behindReluctant 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 allLeast informed about their
business
Eager for new solutions, want to be leaders
Interested in new solutionsWant to know you have sold
lots of itWant 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 BuyersDemand absolute simplicity
of purchase and useOften the least profitable
Cracks in the Adoption Cycle
Tech enthusiasts Visionaries Pragmatists Conservatives Skeptics
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
Technology Languishing in the Chasm
DSL
IP telephony and videoconferencing
Voice processing for dictation
Electronic books
Interoperability with television
GPS
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 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 marketThen there is no market
Then there isGeoffrey Moore
Execution
Use opinion leaders
Reduce the risk of adoption
Be a gorilla (Geoffrey Moore)
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
VHS v. Betamax Sony refused to license Couldn’t meet demand vendors circumvented
Sony
Word Star v. WordPerfect Word Star introduced a
new product in middle of tornado
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
Lesson: Drive to the next lower price point-Hewlett Packard
HP $1,000
HP $500
HP $299
10,000customers
2 millioncustomers
15 millioncustomers
Introduce new product
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
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
Vertical Positioning Pyramid
Manufacture, Market, and Distribute Applications
Sell Or License Know-How
Sell Components or Subsystems
License Core Tech For Applications
Sell Proof of Concept
Least Costly to Buyer
Most Costly to Seller
Innovation Marketing Matrix
EXISTING NEW
Incremental Substitution Diffusion
Radical Early Adopter
Niche Creation
Technology
Customer Groups
Understanding Customer Needs
Cost/benefit Analysis
Compatibility with Existing Technology
Difficulty of Use
Readily Identifiable Benefits
Ability of Benefits to be Observed
Collecting Market Intelligence
Delphi Method – qualitative
Panel of anonymous experts
Substitute Products
Triangulation
Approaching demand from three perspectives
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
The Marketing Plan
Purpose
Value proposition
Target market
Market niche
Marketing tactics
Company’s identity
Promoting
Tell a compelling story
Why you?
Why now?
How will you change the world?
Preannouncements
Develop a brand presence
Take-Aways
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