Transcript High Technology

High Tech Marketing
Fundamentals: Process and
Product
Complexity of Technology
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Unintended Consequences (when things bite back)
 Cars
 South American Fire Ant
 Mobile Phones
 Automated stock trading
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Technological Paradoxes
 Freedom-Enslavement
 Control-Chaos
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Technological Backlash
 Luddites
 GMO
 Others?
The business enterprise has two —and only
two—basic functions: marketing and
innovation.
Marketing and innovation produce results; all
the rest are costs…
-- Peter Drucker
Innovation without Marketing…
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Television (1930s)
AT&T Picturephone
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Missing business model
Ahead of time (1960)
Technology is ubiquitous
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Examples of traditional “high-tech” industries:
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Computers and information technology
Biotechnology
Telecommunications
Internet
Examples of some industries where technological
innovation is creating radical changes:
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Agriculture
Waste Management (GM organisms)
Automotive
Consumer Products (GMO, irradiated chicken)
A Supply Chain Perspective on
Technology
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Often, technological innovations occur at
upstream (i.e., supplier) levels in the supply
chain…
…affecting the manufacturing process or the
inner workings of a product, but…
…end-user behavior may not be significantly
affected
Examples: cars, food, computing, medication,
hair styling, Internet, phone
The Where of Technology
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Process technology
Product technology
Definition of Technology:
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Technology is people using knowledge, tools, and
systems to control processes and the environment.
Definition of High-Technology:
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No single preferred method for identifying high
technology industries.
High technology industries have a great
dependence on science and technology
innovation that leads to new or improved
products and services.
Definitions of Technology:
Government Perspective
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Classify industries based on objective,
measurable indicators:
the number of technical employees
 $ spent on R&D
 # of patents filed in industry
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Why is it so difficult to succeed
in High-Tech settings?
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Complexity of Context
(Hyper)competition
Dynamic/Fickle/Ultra-demanding consumers
Incomplete Information/Partial Knowledge
Timing/Synchronization problems
Organization/Culture problems
Money problems
Strategic Concerns
Characteristics Common to
High-Tech Markets: Supply Side
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“Unit-one” costs: when the cost of producing the
first unit is very high relative to the costs of
reproduction
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Ex: development vs. reproduction of software
Demand-side increasing returns: When the
value of the product increases as more people adopt it
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Also called network externalities and bandwagon effects
Ex: telephone, fax, MS Word
Implications: may give away products for free (IM)
Characteristics Common to
High-Tech Markets: Supply Side
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Tradeability problems arise because it is difficult to value
the know-how which forms the basis of the underlying
technology
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Ex: How much to charge for licensing the rights to a waste-eating
microbe?
Knowledge spillover: Another type of externality that
arises from the fact that technological developments in one
domain spur new developments and innovations in other areas.
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Ex: Human Genome Project
Common, Underlying Characteristics of
High-Tech Markets: Demand Side
Perspective
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Market Uncertainty
Technological
Uncertainty
Competitive Volatility
Market
Uncertainty
Technological
Uncertainty
Marketing of
High-Technology
Products &
Innovations
Competitive
Volatility
Effects of Uncertainty?
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Adoption rate!
There are five variables that have been cited as responsible for
speed of technology adoption:
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Relative Advantage: the degree to which an innovation is perceived as better
than the idea it supersedes
Compatibility: the degree to which an innovation is perceived as consistent
with existing values, technologies, past experiences, and needs of
potential users
Complexity: the degree to which an innovation is perceived as relatively
difficult to use and understand
Trialability: the degree to which an innovation may be experimented with
on a limited basis
Observability: the degree to which the results of an innovation are visible to others
(Wow-factor).
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Rogers, “Diffusion of Innovation.”
Value: Perceived Need-Perceived Price
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Variables essential to the successful uptake of
technology:
Providing an infrastructure
 Providing a function
 Providing the right price point
 Providing a compelling need to buy (make it a necessity).
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What is a disruptive technology?
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Disruptive technologies typically have worse performance, at
least in the near term.
But: They have features that a few fringe and generally new
customers value and which represent a key source of competitive
value in the future.
Products based on them are typically cheaper, simpler, smaller
and frequently more convenient to use - often representing a
new product architecture, design, and even market (category).
They often bring a new and different value proposition.
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See Christensen: “The Innovator's Dilemma”
Examples:
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Muskets
Steam ships
Automobiles
PCs
Digital photography
Continuum of Innovations
Incremental
•Extension of existing
product or process
•Product characteristics
well-defined
•Competitive advantage
on low cost production
•Often developed in
response to specific
market need
•"Demand-side" market
Radical
•New technology creates new
market
•R&D invention in the lab
•Superior functional performance
over "old" technology
•Specific market opportunity or
need of only secondary concern
•"Supply-side" market
Supplier vs. Customer Perceptions of
Nature of Innovation
Mismatch:
Delusion
Breakthrough
Incremental
Mismatch:
Shadow
Contingency Theory
Marketing Strategy
New Product Success
Type of Innovation
-Breakthrough
-Incremental
Type of marketing strategy is contingent
upon the nature of the innovation.
Examples of Implications of
Contingency Theory:
Breakthrough
R&D/Marketing
Interaction
Type of Marketing
Research
Role of Advertising
Pricing
Incremental
“technology push” “customer pull”
Lead users;
developers
Surveys; focus
groups
Primary demand;
Selective demand;
customer education build image
May be premium
More competitive