Marketing of High-Technology Products and Innovations

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Marketing of High-Technology Products and
Innovations

• Marketing Research In
• High-Tech Markets

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Outline of Chapter Gathering Information in
High-Tech Markets

• What is Marketing Research
• Traditional Marketing Research Tools
• Qualitative or Quantitative Methods
• High-Tech Marketing Research Tools
• Empathic Design
• Lead Users
• Quality Function Deployment
• Gathering Competitive Intelligence
• Forecasting Demand
• Delphi method
• Analogous Products
• Information Acceleration

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Marketing Research

• Definition the function which links the consumer
  and market to the marketer through information by
  which
• market opportunities and problems are identified
• marketing performance is generated, monitored and
  evaluated
• Process
• Identify issues
• Specify information necessary to address these
  issues
• Data collection
• Analyze results
• Communicate the findings and implications

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Traditional Marketing Research Tool

• Qualitative Method
• Used when the nature of problem is uncertain
• Exploratory research
• Focus group, interview
• Quantitative Method
• Used when the problem and necessary information
  can be identified
• Exploratory/confirmatory research
• Factor analysis, multidimensional scaling (MDS),
  discriminant analysis, MANOVA, conjoint analysis,
  structural equation modeling, LISREL,

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High-Tech Marketing Research

• Align marketing research tools with type of
  innovation
• Incremental innovation
• Rely on traditional marketing research tools
• Focus groups, surveys, conjoint analysis, etc.
• Breakthrough products
• Market intuition, future scenarios
• Mid-range
• Empathic design, lead users

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Contingency Theory
Type of marketing strategy is contingent upon the
nature of the innovation.
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Aligning Market Research with the Type of
Innovation
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Empathic Design

• Because users may be unable to articulate their
  needs, this technique focuses on observations of
  customer behavior to develop a deep understanding
  the users environment.
• Types of insights
• Triggers of Use
• Unarticulated user needs/coping strategies
• New usage situations
• Customization
• Intangible Attributes

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5 Steps in Empathic Design

• 1. Observation
• Who should be observed?
• Who should do the observing?
• What behavior should be observed?
• 2. Capture the Data
• Less focus on words/text more on visual,
  auditory, and other sensory cues
• Via photos, etc.

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5 Steps in Empathic Design (Cont.)

• 3. Reflection and Analysis
• Identify all customers possible problems and
  solutions
• 4. Brainstorm for Solutions
• Transform observations into ideas
• 5. Develop prototypes of solutions
• Tangible representation or role play/simulation
  of ideas

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Use of Empathic Design At Intel

• Success rate based on engineers idea only 20
• Example video phone
• Team of 8 design ethnographers to find how
  technology can help solve user problems
• Salmon industry
• Business owners
• Teenagers

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Customer Visits

• Use cross-functional teams
• Engineering, marketing, sales account manager
• Supportive corporate culture
• Visit different kinds of customers
• Competitors customers, lost customers, lead
  users, channel intermediaries, internal personnel
• Customer councils

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Customer Visits (Cont.)

• Go to the customers site
• (versus bringing them on-premise for a dog and
  pony show)
• Ask probing questions
• Ensure customer visits are programmatic/systematic
  
• (not ad hoc)

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Lead Users

• Some customers face needs before a majority of
  the market place
• Their needs may be more extreme than typical
  customers
• Ex auto racers and militarys needs for better
  brakes
• They stand to benefit by obtaining solutions to
  their needs sooner rather than later
• They tend to innovate their own solutions to
  their needs (see Table 5-1)

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Lead Users
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Lead Users in Market Research

• The lead user process can create breakthrough
  products by systematically identifying lead users
  and learning from them.

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Steps in Lead User Research

• 1. Identify important trend
• Via standard environmental scanning
• 3M identified trend of detecting small features
  via medical imaging, which required
  higher-quality high-resolution images

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Steps in Lead User Research

• 2. Identify and question lead users
• Personal contacts with customers, surveys,
  networking with experts, empathic design
• Respect possible sensitivity of information
• Ex
• 3M identified radiologists working on most
  challenging medical problems, who had developed
  imaging innovations to meet their needs
• Networking to other fields in pattern recognition
  (the military) and semiconductors

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Steps in Lead User Research

• 3. Develop the breakthrough product(s)
• Host a workshop for experts and lead users to
  brainstorm
• Ex medical imaging, experts in high-resolution
  imaging, and pattern recognition developed ideas
• 4. Assess how well lead user data and
  experiences apply to more typical users
• Gather market research from typical users

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Benefits of the Lead User Process

• New insights from gathering and using information
  in new ways
• Cross-functional in nature
• Collaboration with innovative customers
• Requires corporate support, skilled teams, time.

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Example of Lead User Process 3M Corporation
and Infection Control

• 1. Identify important trends in infection
  control
• Travel to extreme situation surgical
  environments in developing countries
• 2. Identify lead users
• Veterinary hospitals, make-up artists in
  Hollywood

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Example of Lead User Process 3M Corporation
and Infection Control

• Develop the breakthrough ideas at a workshop with
  experts and lead users
• Economy line of surgical drapes, hand-held
  devices to apply anti-microbial substances to
  skin, armor line to coat catheters and tubes
  with anti-microbial protection, and upstream
  containment of infection prior to surgery for
  high-risk patients.

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Quality Function Deployment

• What A tool that provides a bridge between the
  voice of the customer and product design
• Purpose Ensure tight correlation between
  customer needs and product specifications.
• Requirement Close collaboration between
  marketing, engineers, and customers

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QFD Process

• Collect the voice of the customer
• Identify customer needs regarding desired product
  benefits via customer visits or empathic design
• Weight or prioritize desired benefits/attributes
• Collect customer perceptions of competitive
  products
• Transform data into design requirements
• Customer requirements deployment identify
  product attributes that will meet customer needs
• House of quality a planning approach that
  links customer requirements, design parameters
  and competitive data.

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QFDUsing the Kano Concept
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QFD3 Types of Attributes

• 1. One-dimensional quality
• Increases in level of attribute linearly related
  to customer satisfaction
• Typically known attributes identified by
  customer
• EX battery life in lap tops

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QFD3 Types of Attributes (Cont.)

• 2. Must-be quality
• Increases in level of attribute has negligible
  effect on customer satisfaction
• However, decreases in attribute has strong
  negative effect on customer satisfaction
• Because they are so basic to product
  functionality, they are typically unspoken
  attributes customer expects product to deliver
  these
• EX ability of laptop to handle bumps and rough
  handling

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QFD3 Types of Attributes (Cont.)

• Attractive Quality
• Increases in level of attribute associated with
  exponential increase in customer satisfaction
• But, because attribute is one that delights the
  customer, its absence does not necessarily lead
  to dissatisfaction
• Typically unknown to customer at conscious level
• Ex decompressable/expandable laptop

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QFD Summary

• Firmly grounds product design in customer needs
• Allows product development team to develop common
  understanding of design issues and trade-offs
• Reveals friction points and enhances
  collaboration

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QFD and Total Quality Management

• TQM grounded in customer knowledge and ability to
  deliver customer value, which is enhanced by
• Customer excellence
• Cycle-time excellence
• Cost excellence
• Cultural excellence

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Customer excellence

• Tied to being customer-focused and
  market-oriented
• Knowledge of customer environment and product
  useage

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Cycle-time excellence

• Products late to the market suffer negative
  impacts to profitability from two reasons
• Long time-to-market cycles typically experience
  cost over-runs
• More importantly, products late to the market
  suffer loss of market share
• Lesson Being fast to market is important, but
  only when combined with ability to accurately
  deliver customer requirements
• Therefore, link QFD with TQM

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Relationship between Entries in the Market and
Quality
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Does this approach to cycle time excellence make
sense?

• Bring higher levels of product functionality to
  the market incrementally over time with
  successive product iterations.
• Yes!
• Striving for complicated set of features with
  initial offering can lead to delays
• Delays mean that customer needs may have changed
  or a competitor beats firm to the market
• Purchasers of first generation of new product
  become installed base for later generations

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QFD and TQM (Cont.)

• Cost Excellence
• Provide customer value and lowest possible cost
• Use supply partnerships
• Use downsizing cautiously, lest negative impact
  on customer value
• Cultural Excellence
• Align goals of the organization and of personnel
  to be able to capitalize on market opportunities
• Ex culture of innovation, effective
  marketing/RD interaction

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Competitive Intelligence

• What Information about competitors
• Why Provides information for better decision
  making and improved strategies
• An early warning system

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Effective Competitive Intelligence Programs

• Affect decisions of top managers
• Are proactive in reading the market
• Look beyond existing market boundaries
• Utilize the Web
• Gauge potential for misleading signals

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Forecasting Customer Demand for High-Tech
Innovations

• Who the hell wants to hear actors talk?
• Harry M. Warner (1927) reacting to addition of
  audio technology to silent movies
• Television wont be able to hold on to any
  market it captures after the first six months.
  People will soon get tired of staring at a
  plywood box every night.
• Darryl Zanuck, 20th Century Fox Films, 1946 
• There is little reason for any individual to
  have a computer in their home.
• Ken Olsen, president and founder of the DEC
  Corporation,1977

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Qualitative Forecasting Tools

• Delphi method
• Rely on a panel of experts
• Analogous data
• Rely on similar products
• Information Acceleration
• Use virtual prototypes to obtain customer
  feedback

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High-Tech Forecasting Hazards

• Lack of historical data
• Difficult for customers to articulate preferences
  
• Inflated projects from over-enthusiasm
• Competition from incumbent technologies
• Dont confuse confidence in the forecast with
  quality of the information