Marketing High Technology: Crossing the Chasm and Other Issues

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Marketing High Technology Crossing the Chasm
and Other Issues

• Dr. Dawne Martin
• MGMT 897
• April 22, 2003

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Agenda

• What makes high-tech marketing different?
• How does technology create competitive advantage?
• What are in critical success factors in moving
  technology through the Technology Adoption Life
  Cycle?
• How do you build a high-tech marketing plan?

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What Makes High-Tech Marketing Different?

• Types of Innovations
• Continuous extensions of previous technology
• Discontinuous disruptive technologies
• Changes in strategy and behavior
• May not be intuitive to market
• May require changes in infrastructure
• Customer Knowledge
• Education of customer to create value
• Life Cycle Time
• Pace of adoption of new technologies and change
  to other technologies

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Market Penetration and Market Development Index
Figure 3.6 Roger Best, Market-Based Management,
2nd ed.
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Competitive Advantage Hierarchy
Differentiation
Offer Power
GAP
Markets
Customer Power
Value Chains
Industry Power
Technologies
Category Power
CAP
Competitive Advantage Effects
Competitive Advantage Drivers
Adopted from Paul Wiefels, The Chasm Companion,
Harper Business, 2002.
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What Speeds Adoption?

• Relative advantage
• Compatibility
• Visibility
• Trialability
• Ease of Use
• Question What are the advantages and
  disadvantages of the McMasters engine relative to
  current technology and fuel cell technology.

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Early Market -- Technology Enthusiasts

• Assume that discontinuous innovation is superior
  to current technology
• Seek out opportunities to explore new
  technologies
• Forgiving of mistakes and bugs
• Gatekeepers for new technologies in business
• What they want
• The truth about product
• Access to most knowledgeable technical people
• First to get new stuff

Geoffery A. Moore, Crossing the Chasm, Harper
Business, 1991
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Early Market -- Visionaries

• Match new technologies to opportunities
• Create high-visibility, high-risk projects
• Looking for a quantum leap forward for industry
  and customers fundamental breakthrough
• Not price-sensitive or adverse to risky products
• What they want
• Project orientation
• Meet window opportunity
• Expectations manage these through project
  timelines with specific deliverables and frequent
  updates

Geoffery A. Moore, Crossing the Chasm, Harper
Business, 1991
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Mainstream Markets -- Pragmatists

• Focus on making incremental improvements in
  productivity
• Desire standardization loyal customers
• Communicate within their own industry
• Keep vendors to a minimum
• What they want
• Cost effective solutions
• Proven technology
• Single point of contact
• Price
• Take their time to make decisions

Geoffery A. Moore, Crossing the Chasm, Harper
Business, 1991
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Mainstream Markets The Conservatives

• Against discontinuous innovation on principle
  tradition focused
• Buy and use discontinuous innovations because
  they must to keep up
• Invest only in mature technologies
• Price sensitive
• What they want
• Pre-assembled packages
• Heavily discounted prices
• Ease of use
• Single function

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Marketing to Cross the Chasm Paul Wiefels, The
Chasm Companion, Harper Business, 2002

• Target specific niche markets through technology
  enthusiasts and visionary stages
• Broaden niche to cross chasm Bowling Alley
• Shared applications
• Word of mouth for refereneces
• Develop a must have value-statement
• Capability to ensure competitive advantage
• Improves productivity
• Reduces operating costs
• Choose a niche
• Application niche
• Thematic niche portability across incompatible
  hardware platforms

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Marketing to Cross the ChasmPaul Wiefels, The
Chasm Companion, Harper Business, 2002

• Inside the Tornado hyper-growth through changes
  in business paradigm
• Herding move together
• Preference for emerging market leader
• Competitors enter to fill supply gap Gorillas,
  Chimps Monkeys
• Competing in the Tornado
• Showcase your strengths highlight competitors
  weakness
• Standardize product offering reducing
  complexity, time to customer, service
  requirements
• Drive price down
• Make products widely available
• Community all points of advantage
• Main Street Issues Market Maturity and Decline
• Growth slows or sales decline
• Profits lag
• Competing
• Commodity approach
• Market share
• Superior and sustainable economies of scale
• Low-cost channels
• Operate profitably on low and declining margins

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Components of a Marketing Plan

• Environmental Internal Analysis
• Marketing Strategy
• Analysis of potential markets
• Target market(s)
• Positioning
• Tactical Marketing Strategy
• Marketing Budget
• Performance Timeline
• Performance Evaluation

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Environmental Internal Analysis

• Whats happening as the industry as a whole?
  Whats driving the industry
• Technology changes
• Economics
• Socio-cultural changes
• Political legal changes
• What are youre companies strengths and
  weaknesses?
• Technology/Product
• Marketing Expertise
• Management Manufacturing Capabilities
• Financial Resources
• Human Resources

Analyze the current climate in the auto industry
and what McMasters has going for it.
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Marketing Strategy

• Choose target markets from segments VALUE!
• Assess market attractiveness
• Market growth
• Competitive intensity
• Market access
• Assess competitive advantage
• Cost advantage
• Differentiation advantage
• Marketing advantage
• Positioning focus on relative competitive
  advantages and customer needs
• Conduct a preliminary analysis of potential
  market segments.

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Figure 11.4Factors That Shape Market
Attractiveness
Roger Best, Market-Based Management,
Prentice-Hall, 2000.
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Figure 11.6Determinants of a Competitive
Advantage
Roger Best, Market-Based Management,
Prentice-Hall, 2000.
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Develop Tactical Plan

• Marketing mix decisions to implement strategy
• Product and service quality and attributes
• Pricing
• Channels of Distribution
• Multiple Channels
• E-commerce
• Sales force or manufacturers reps
• Promotion
• Direct marketing
• Publicity
• Advertising
• Based on the needs and habits of transportation
  customers, where should you spend your money?

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Marketing Budgets

• Provide detailed expenditures with justification
  for each expenditure how it was calculated
• Start with a cash flow projections
• Should forecast sales growth over 3 5 years
• Justify your sales forecasts by information on
  market growth, competitors and customer needs
• Justify your expenditures