Description
This about high tech products, definitions, characteristics, technology curve, PLC, impact of uncertainty, innovation and marketing strategy
HIGH TECH PRODUCTS
? What is technology ?
“ The practical knowledge, know how, skills and artifacts that can be used to develop a new product/ service and/or a new production/delivery system. Technology can be embodied in people, physical processes, plant, equipment & tools”
TECHNOLOGY = KNOWLEDGE, SKILLS & ARTIFACTS
HIGH TECH PRODUCTS
? What is technology ? : OK
? What is “High” Technology ?
? ? ?
No consensus Great Confusion Perspective Issues
DEFINITIONS
“ Industry having twice the number of technical employees and double the R&D budget of the U.S. average - US Bureau of labor statistics “Industries characterized by complex products, large number of entrepreneurial competitors, customer confusion and rapid change” - Regis McKenna ( consultant ) “ Any company that participates in a business with high-tech characteristics: the business requires a strong scientific/technical basis: obsolescence is high : new technologies revolutionarize demand” - William Shanklin & John Rayons ( HBR )
PRODUCT FOCUSSED
? High Technology Products are the results of turbulent
technology and which require substantial shifts in behaviour of at least one member of the product usage channel
? Gardener 2000
CHARACTERISTICS
? High spend on Research & Development ? Strong Technical /Scientific basis/ Complex
Products
? Large number of entrepreneurial competitors
? Rapid Change /High Obsolescence /Customer
Confusion
? Revolution in Demand
CHARACTERISTICS Constant upward ? Constant downward pressure on prices/
pressure on product benefits
? Product development times often longer than life cycles ? Frequent market disruption from new technologies ? New products often force complete replacement of existing
infrastructure
? Discontinuity in product life cycle ? Network Products (Externality / Complimentary Products)
TECHNOLOGY S - CURVE
More Competition
Cost
Point of Inflection
Features
PLC IMPLICATIONS
v
Successive generations of a technology
t
MAKING SENSE – PRODUCT LEVEL
? To bring a new technology costs money ? A new technology has its standards and requires
infrastructure
? Once new technology is accepted it attracts competition ? Product improvements come regularly as they are not
costly
? Customer confusion/rapid change
MAKING SENSE – SOLUTION LEVEL
? Each product is a system made of several technologies ? No one is expert on the whole system ? Each one has vertical focus. Keeps on working on his area
of expertise. Marketer confusion
? A new invention at the component level can make a
product obsolete
? Customer Confusion
TWO UNDERLYING DIMENSIONS
? Technical Uncertainty ? As faced by the customers ? Market Uncertainty ? As faced by the marketers
Will the new product function as promised?
Will the technology render ours obsolete?
TECHNOLOGICAL UNCERTAINTY
Will the delivery be made on time?
Will there be any side effects?
Will the vendor give High quality service?
What needs might be met by the new technology?
How Large is the potential market?
MARKET UNCERTAINTY
How will the needs change in the future?
How fast will the innovation spread?
Will the market adopt industry standards?
IMPACT OF UNCERTAINTY
? Uncertainty Leads to Risk ? Risk outweighs benefits ( Webster 1971) ? Customer must handle risk before buying (Bauer 1961) ? Managerial Response to Risk ? Risk with smaller probabilities but with larger losses are avoided
CONCEPTRisk Can be OF CONSUMER RISK ?
? Financial
? Physical ? Social ? Psychological ? Performance ? Time
HOW DOES RISK AFFECT BUYING?
CUSTOMER ADOPTION OF HIGH TECHNOLOGY
?Technology Acceptance Model (TAM)
? Davis 1984
?Diffusion of Innovation Model
? Rogers 1961
TAM
Uncertainty Perceived Usefulness
Intention to Adopt
Perceived Ease of Use
Uncertainty
INNOVATION DIFFUSION
Relative Advantage Compatibility
Uncertainty
Trialability
Observability
Adoption
Complexity
HOW TO REDUCE RISK
? Past Experience : Hardly exists ? Brand Name : May not be available
? Price : Reduces the loss not uncertainty
? Seek Information : Formal / Informal
DOMAIN OF HIGH TECH MARKETING
MARKET UNCERTAINTY (Seller)
Low
3
High
High
TECHNLOGICAL UNCERTAINTY (Buyer)
Better Mousetrap Marketing
1 2
High-Tech Marketing
Low
Low-Tech Marketing
High-Fashion Marketing
MARKETING STRATEGIES
? Broad Spectrum ? Segmentation
?
AEL, Microsoft Pre announcements
? Product / Launch Timing
?
? Price ? Promotion ? Place
?
Direct / Strategic Alliances Intel
? Branding / CRM
?
BROAD STRATEGIES
? Target Marketing
? Do not sell to anyone who has money ? Do not try to be everything to customers
? Narrow focus is fine
? Eg. Load Manager from AEL
? Clear Product Policy
? Standardization v/s customization (comptn)
? Industry standard v/s proprietary ( RISC v/s Open) ? Breadth & Depth of products (Bundling)
BROAD STRATEGIES
? Get into alliances / Build relationships
? Use capabilities / reputation etc ? Can define / develop standards together ? Eg. IBM / DOS
? Recruit Creatively
? You need people who learn fast ? You need people who unlearn fast
(COMMUNICATION) PROPAGATION MECHANICS
Extent of Marketer Credibility High
•Change Agents
Low
•Neighbors •Friends
Personal Type of Contact
•Professional advocates
•Radio •Consumer Reports
Impersonal •Television
•Print Media
•Govt. Publications
doc_309823063.ppt
This about high tech products, definitions, characteristics, technology curve, PLC, impact of uncertainty, innovation and marketing strategy
HIGH TECH PRODUCTS
? What is technology ?
“ The practical knowledge, know how, skills and artifacts that can be used to develop a new product/ service and/or a new production/delivery system. Technology can be embodied in people, physical processes, plant, equipment & tools”
TECHNOLOGY = KNOWLEDGE, SKILLS & ARTIFACTS
HIGH TECH PRODUCTS
? What is technology ? : OK
? What is “High” Technology ?
? ? ?
No consensus Great Confusion Perspective Issues
DEFINITIONS
“ Industry having twice the number of technical employees and double the R&D budget of the U.S. average - US Bureau of labor statistics “Industries characterized by complex products, large number of entrepreneurial competitors, customer confusion and rapid change” - Regis McKenna ( consultant ) “ Any company that participates in a business with high-tech characteristics: the business requires a strong scientific/technical basis: obsolescence is high : new technologies revolutionarize demand” - William Shanklin & John Rayons ( HBR )
PRODUCT FOCUSSED
? High Technology Products are the results of turbulent
technology and which require substantial shifts in behaviour of at least one member of the product usage channel
? Gardener 2000
CHARACTERISTICS
? High spend on Research & Development ? Strong Technical /Scientific basis/ Complex
Products
? Large number of entrepreneurial competitors
? Rapid Change /High Obsolescence /Customer
Confusion
? Revolution in Demand
CHARACTERISTICS Constant upward ? Constant downward pressure on prices/
pressure on product benefits
? Product development times often longer than life cycles ? Frequent market disruption from new technologies ? New products often force complete replacement of existing
infrastructure
? Discontinuity in product life cycle ? Network Products (Externality / Complimentary Products)
TECHNOLOGY S - CURVE
More Competition
Cost
Point of Inflection
Features
PLC IMPLICATIONS
v
Successive generations of a technology
t
MAKING SENSE – PRODUCT LEVEL
? To bring a new technology costs money ? A new technology has its standards and requires
infrastructure
? Once new technology is accepted it attracts competition ? Product improvements come regularly as they are not
costly
? Customer confusion/rapid change
MAKING SENSE – SOLUTION LEVEL
? Each product is a system made of several technologies ? No one is expert on the whole system ? Each one has vertical focus. Keeps on working on his area
of expertise. Marketer confusion
? A new invention at the component level can make a
product obsolete
? Customer Confusion
TWO UNDERLYING DIMENSIONS
? Technical Uncertainty ? As faced by the customers ? Market Uncertainty ? As faced by the marketers
Will the new product function as promised?
Will the technology render ours obsolete?
TECHNOLOGICAL UNCERTAINTY
Will the delivery be made on time?
Will there be any side effects?
Will the vendor give High quality service?
What needs might be met by the new technology?
How Large is the potential market?
MARKET UNCERTAINTY
How will the needs change in the future?
How fast will the innovation spread?
Will the market adopt industry standards?
IMPACT OF UNCERTAINTY
? Uncertainty Leads to Risk ? Risk outweighs benefits ( Webster 1971) ? Customer must handle risk before buying (Bauer 1961) ? Managerial Response to Risk ? Risk with smaller probabilities but with larger losses are avoided
CONCEPTRisk Can be OF CONSUMER RISK ?
? Financial
? Physical ? Social ? Psychological ? Performance ? Time
HOW DOES RISK AFFECT BUYING?
CUSTOMER ADOPTION OF HIGH TECHNOLOGY
?Technology Acceptance Model (TAM)
? Davis 1984
?Diffusion of Innovation Model
? Rogers 1961
TAM
Uncertainty Perceived Usefulness
Intention to Adopt
Perceived Ease of Use
Uncertainty
INNOVATION DIFFUSION
Relative Advantage Compatibility
Uncertainty
Trialability
Observability
Adoption
Complexity
HOW TO REDUCE RISK
? Past Experience : Hardly exists ? Brand Name : May not be available
? Price : Reduces the loss not uncertainty
? Seek Information : Formal / Informal
DOMAIN OF HIGH TECH MARKETING
MARKET UNCERTAINTY (Seller)
Low
3
High
High
TECHNLOGICAL UNCERTAINTY (Buyer)
Better Mousetrap Marketing
1 2
High-Tech Marketing
Low
Low-Tech Marketing
High-Fashion Marketing
MARKETING STRATEGIES
? Broad Spectrum ? Segmentation
?
AEL, Microsoft Pre announcements
? Product / Launch Timing
?
? Price ? Promotion ? Place
?
Direct / Strategic Alliances Intel
? Branding / CRM
?
BROAD STRATEGIES
? Target Marketing
? Do not sell to anyone who has money ? Do not try to be everything to customers
? Narrow focus is fine
? Eg. Load Manager from AEL
? Clear Product Policy
? Standardization v/s customization (comptn)
? Industry standard v/s proprietary ( RISC v/s Open) ? Breadth & Depth of products (Bundling)
BROAD STRATEGIES
? Get into alliances / Build relationships
? Use capabilities / reputation etc ? Can define / develop standards together ? Eg. IBM / DOS
? Recruit Creatively
? You need people who learn fast ? You need people who unlearn fast
(COMMUNICATION) PROPAGATION MECHANICS
Extent of Marketer Credibility High
•Change Agents
Low
•Neighbors •Friends
Personal Type of Contact
•Professional advocates
•Radio •Consumer Reports
Impersonal •Television
•Print Media
•Govt. Publications
doc_309823063.ppt