Transcript Expeditionary Marketing

Marketing of High-Technology
Products and Innovations
Jakki J. Mohr
Chapter 2:
Strategy and Corporate Culture in
High-Tech Firms
Internal (within the firm)
Considerations in
High-Tech Marketing
ENHANCED
ODDS OF
SUCCESS
Effective
Cross-Functional Marketing
/R&D Collaboration
Being Market-Orientated
Acquire
Disseminate
Use Information
Relationship Marketing
Partnering with important stakeholders
Access to Resources
Funding
Management Expertise
Maintaining Innovativeness
Creative Destruction
Corporate Imagination
Expeditionary Marketing
© Jakki Mohr 2001
Culture of Innovation
Strategic Market Planning
Process in High-Tech Markets
Implement
the
Strategy
Identify
Attractive
Opportunities
Define the
Business Arena
•
Understand the
Market
Environment
Understand the
Profit Dynamic
•
Planning Process
Assess Resources
and
Competencies
Complete the
Winning Strategy
•
Plan Critical
Relationships
Make Tough
Strategic
Choices
© Jakki Mohr 2001
Understand the
Competitive
Challenge
1. Define the Business Arena
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Potential customer segments that could be
served;
Potential applications or functionality that could
be provided to these customers;
Possible technologies and capabilities that could
be used to create the applications or
functionality; and
Possible role for the organization in providing
the value to the customer versus the roles of
others in the market chain.
© Jakki Mohr 2001
2. Identify Attractive
Opportunities
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Thoroughly segment the market
Assess profitability of serving each
segment
© Jakki Mohr 2001
3. Understand the Market
Environment
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Depict market flows/supply chain
Understand buyer behavior
© Jakki Mohr 2001
4. Assess Resources and
Competencies
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Financial resources
Technology platforms
Intellectual capital
Manufacturing capacity
Brand equity
Capabilities (including skills and
knowledge)
© Jakki Mohr 2001
5. Understand the
Competitive Challenge
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Identify the actual, potential and indirect
competitors
Determine:
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How each competitor competes
Their current and likely future performances
What drivers underlie their business strategies
Consider likely competitive responses to
opportunity
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What are this competitor’s areas of weakness or
vulnerability that the firm could exploit?
© Jakki Mohr 2001
6. Make Tough Strategic
Choices
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Decide whether opportunity should be
pursued
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What will it be worth to win?
Is the market opportunity attractive enough?
Is the strategy powerful enough to generate a
sufficient level of profitability?
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If not, are there compelling reasons to proceed?
© Jakki Mohr 2001
6. Make Tough Strategic
Choices (Cont.)
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Select/develop best strategy to take
advantage of opportunity
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Achieve leadership position in the
opportunity?
© Jakki Mohr 2001
6. Make Tough Strategic
Choices (Cont.)
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Do synergies exist within the portfolio of
opportunities being considered
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Leverage a common technology
Leverage a common market chain
Are the strategies for the various
opportunities reasonably consistent?
© Jakki Mohr 2001
7. Plan Critical Relationships
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With other firms in the market chain
With organizations outside the market
chain
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Company with a complementary product or
service
© Jakki Mohr 2001
8. Complete the Winning
Strategy
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Pricing
Marketing Communications
© Jakki Mohr 2001
9. Understand the Profit
Dynamic
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Develop a detailed financial model for
each opportunity
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More refined profitability analysis based on
detailed understanding of complete
marketing strategy and associated costs
Look for modifications to enhance
opportunity’s overall profitability.
© Jakki Mohr 2001
10. Implement the Strategy
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Make sure people who will implement
are involved in the strategy formulation
process
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Commitment
© Jakki Mohr 2001
“Liability of Bigness”
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Traits of large firms can inhibit their
ability to develop radical innovations:
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Bureaucratic
Focused on economies of scale
Core competencies become core rigidities
© Jakki Mohr 2001
Three Characteristics of
Core Competencies
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Difficult for competitors to imitate
Significantly related to benefits enduser receives
Allow access to a wide variety of
disparate product-markets.
© Jakki Mohr 2001
Tree Analogy to Core Competencies
Branches/canopy
represents the widely different
product markets to which
the core competency has provided access
MOTORCYCLES
SNOWBLOWERS
LAWN
MOWERS
Trunk is the core
product, or the physical
embodiment of the
core competencies.
SMALL
ENGINES
SMALL
CARS
The core
product must be
significantly related to benefits
end-user receives.
CORPORATE
CULTURE
SUPERIOR R&D
SUPERIOR
MANUFACTURING
SUPERIOR MARKETING &
KNOWLEDGE OF CUSTOMERS
Roots are underlying skills and capabilities that represent core competencies.
© Jakki Mohr 2001
Implications of Core
Competencies in Strategic
Planning
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Resource allocations may defy
conventional logic
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Violate ROI criterion
© Jakki Mohr 2001
When Core Competencies
Become Core Rigidities
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Core rigidities: ingrained routines,
knowledge, and skills become straitjackets that inhibit a firm’s ability to
develop new products built around
unfamiliar skills, routines, and new
knowledge.
Ex: cultural norms, over-reliance on
existing technologies
© Jakki Mohr 2001
How to Avoid Core Rigidities
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Creative Destruction
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Proactively develop next-generation technology
that may obsolete current technology
Ex: Develop Web-sites that undermine current
distribution channels
Corporate Imagination
Expeditionary Marketing
Culture of Innovation
© Jakki Mohr 2001
4 Elements of
Corporate Imagination
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(1) Willingness to overturn
price/performance assumptions
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Incremental improvements to existing
technologies (which move along the same
price/performance curve) vs.
Radical innovations which allow greatlyimproved performance at roughly comparable
prices as existing technology
Technology life cycles (see next slide)
Ex: Moore’s Law
© Jakki Mohr 2001
Technology Life Cycles
Performance
Limit of Particular Technology
Time
© Jakki Mohr 2001
Some Implications of
Technology Life Cycles
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New technologies often come from
companies not selling current generation of
technology
Incumbents often invest in both improving
existing technology and developing new
Incumbents often underestimate viability of
new developments
Therefore, new technologies can catch
established firms by surprise
© Jakki Mohr 2001
4 Elements of
Corporate Imagination (Cont.)
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(2) Escape the “tyranny of the served
market”
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Excessive focus on current customers
Obscures the fact that customer needs
may change over time and may be solved
in radically new ways
Therefore, look for market opportunities
outside of existing product/markets.
© Jakki Mohr 2001
4 Elements of
Corporate Imagination (Cont.)
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(3) Use new sources of ideas for
innovation
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Rather than using standard marketing
research tools, use lead users and
ethnographic observation (empathic
design) (Discussed fully in Ch. 5)
© Jakki Mohr 2001
4 Elements of
Corporate Imagination (Cont.)
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(4) Get out in front of customers.
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Lead them where they want to go before
they themselves know it.
Requires being “close to the customer”
AND not being blinded by existing rules
and procedures.
© Jakki Mohr 2001
Box: Breakthroughs in
Corporate Strategy
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Don’t be constrained by existing industry
boundaries
Competitors can be found in many places:
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Direct competitors, suppliers, partners
Product form competition
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competition between product classes vs. between
different brands of the same product
Firm may not control all critical assets
© Jakki Mohr 2001
Box: Breakthroughs in
Corporate Strategy (Cont.)
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Bring new voices into the strategy
formulation dialogue.
Create new connections across
technologies, hierarchical levels,
geographical and business units
Come from a new vantage point
Have passion for discovery and novelty
Be willing to experiment
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(vs. focus on efficiency)
© Jakki Mohr 2001
Be a Market Pioneer??
PROS
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CONS
First mover advantage
 Large development costs
creates entry barriers
 Market uncertainty
 Economies of scale
 Experience effects
 Reputational effects
 Technological leadership
 Buyer switching costs
 Higher profits and higher
share
 Define product exemplar
 Higher consumer
© Jakki Mohr 2001
awareness
Pioneers
(“First Movers”) (Cont.)
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Successful Pioneers
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Have technological foresight
Understand the market
Have marketing acumen
Understand competitors’ strengths and
weaknesses
A bit o’luck
© Jakki Mohr 2001
When do “late” movers
succeed?
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Identify overlooked product position
Undercut pioneer on price
Out-advertise or out-distribute the
pioneer
Innovate superior product
Innovate superior business/marketing
strategy
Reshape the category
© Jakki Mohr 2001
Two ways to improve
new product success rates
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Improve the odds on each individual product
introduction—the “hit” rate.
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Gather as much information as possible, tailor the
product
Drawbacks: time consuming, market needs may change
before launch. “Ready, Aim, Aim, Aim.”
Increase the number of forays into the market—
the “times at bat”—Expeditionary Marketing
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Many quick incursions into the market increases learning
about the market
Low-cost, fast-paced incursions allow quick recalibration
© Jakki
Mohr
2001
Combination of speed
and
learning
enhances success
Expeditionary Marketing
Expeditionary Marketing: Many fast-paced incursions into the market
Relationship between Entries in the Market and Quality
Model 3
Model 2
Model 1
Development
Overall Revenue
Incr. Revenue
New Models
Time
© Jakki Mohr 2001
Expeditionary Marketing:
Advantages
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More accurate learning of customer needs
Time between market learning and product launch
is shortened
Maximizes odds that product delivered matches
customer’s needs
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Customer needs less likely to change in the short-term
Implication: Issue is less being right the first time,
but being able to accumulate market experience,
and quickly adapt market offerings
© Jakki Mohr 2001
Insights in the Ability to Learn
from the Market
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Competitive advantage derives less
from having information, and more from
the superior ability to use information.
Interpersonal and organizational trust
enhances the use of information.
© Jakki Mohr 2001
Insights in the Ability to Learn
from the Market (Cont.)
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Caveats in using information
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Merely using some information is insufficient to generate
superior performance. Using knowledge held by
marketing managers contributes to superior performance.
Relying too excessively on organizational memory can
inhibit innovativeness.
It is the marriage of marketing knowledge with
technological knowledge that leads to effective product
innovation.
Improvising with respect to product strategy may
be effective—but only when a high degree of
information is shared both within and across the
organization’s boundaries.
© Jakki Mohr 2001
Nurturing a
Culture of Innovation
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Characteristics of a firm that fosters
innovation—
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Identifies market needs that are divergent
from (rather than congruent with) existing
strategies
Roles and responsibilities of key players may
not be clearly defined in early stages
Screening for new product ideas not based on
formal criteria, but done informally based on
technical/market merit
© Jakki Mohr 2001
Characteristics of Organizations
Who Foster Innovation (Cont.)
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Role of product champion is key
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Tireless crusaders for idea
Innovative firms have reward system and
culture to promote influence of product
champions
Personnel given time and incentives to
be innovative
Tolerate risk and “mistakes”
© Jakki Mohr 2001
Skunk Works
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Pros:
Isolate new venture groups outside the
normal organizational hierarchy
Cons:
- Signals a corporate culture that
- Allows for more
creativity, unfettered byhas impediments to innovation
existing corporate
(Creativity doesn’t happen
protocols.
within normal operating
procedures)
- Isolates the creative process
© Jakki Mohr 2001
Applying Lessons of Innovativeness
to Businesses’ Internet Experiences
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New business models came from industry
outsiders
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Core rigidities and the tyranny of the served
market:
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Competitive Volatility
Existing companies bound by existing rules of the
game and existing customers
Underestimation of new competitors
Need for creative destruction
© Jakki Mohr 2001
Applying Lessons of Innovativeness
to Businesses’ Internet Experiences
(Cont.)
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Expeditionary Marketing:
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Shorter learning cycles
Quicker opportunity to adapt strategies
Understand core competencies
Reliance on skunk works
Pioneering advantages
© Jakki Mohr 2001
“The Liability of Smallness”
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Financial Resources
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Reliance on venture capital
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Formal companies/banks
Informal “angels”
What Venture Capitalists Look For:
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Management Team
Marketing Plan
Technology/Product
ROI
© Jakki Mohr 2001
Other Resources for Start-Ups
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Technology incubators
Partners (Ch. 3)
© Jakki Mohr 2001