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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