Title: Technology Marketing and the Entrepreneurial Firm Dr' Alan L' Carsrud The FIU Center for Global Entr
1Technology Marketing and the Entrepreneurial
FirmDr. Alan L. CarsrudThe FIU Center for
Global Entrepreneurship InnovationThe FIU
Colleges of Business Administration and
Engineering and Applied Sciences Based on the
materials of Professor Bob Foster of UCLA
2Basic Marketing Questions
- What products do we sell?
- To whom do we sell?
- Who sells our products?
- How do we promote sales?
- What price do we charge?
- What about customer service?
3Different Viewpointsof a Product
- Technologists View
- Product centered
- Focuses on device
- Minimizes packaging
- Minimizes corporate imaging
- Customers View
- Looks at bigger picture
- Evaluates the whole product
- Interested in the extras
- Interested in image of company
4The Whole Product Concept
Corporate Imaging
Product Packaging
Device
5Whats a Device?
- The basic, core product
- What the customer actually uses
- The invention, software, hardware
- What the engineers design, develop, build
- Examples
- Software Code
- Hardware Physical product
6Product Packaging
Packaging
Device
Device
7What isProduct Packaging?
- What are things, processes, images, services,
and extra features that high tech firms need to
wrap around their product?
8Four Major Elements of Packaging
- During the sales process
- As part of the product device
- The physical package
- In post-sales support
9Elements of Product Packaging
- Sales Process
- Pre-Sale Support
- Pricing
- Financing
- Warranty
- Trade-In Policy
- Sales approach
- Advertising
- Product Related
- Ease of Initial Conversion
- Product Family
- Platform
- Industry Standards
- Migration Strategy
- Product Upgrade Policy
10- Post-Sale Support
- Delivery
- Installation
- Training
- Telephone On-line Support
- Maintenance/Parts
- User Groups
- Physical Package
- Product exterior graphics design
- Color materials
- Shipping carton
- Documentation
11To Provide Effective Product Packaging
- Understand your customers needs
- Spend time observing your customers
- Talk to them about their requirements
- Design whole products from the start
- Dont try to design the perfect product
- Probe and learn
- Get feedback
- Avoid feature creep
12- Outsource if you cant provide all elements of
the whole product - Create joint venture or make acquisition
13Most Customers Want To
- Buy a complete, whole product
- Solve a problem with a total solution
- Buy it from one vendor
- Buy it all at once
- Not be a beta test site
- Buy from a solid, reputable supplier
14Aspects of Corporate Imaging
- Company product name and logo
- First and beta test customers
- VC firms, investors, bankers
- Members of board of directors
- Endorsements from industry gurus
- Favorable press reviews
- Positive word of mouth
15Device
Plus
Product Packaging
Plus
Corporate Imaging
Equals
A Whole Product and/or Service
16Summary of the Whole Product or Service
- View product or service from customers viewpoint
- Focus on customers needs
- Provide a complete solution
- Engineering designs the core device
- Marketing completes the whole product or service
17How Can You Differentiate a High Technology
Product or Service?
- How can the device/product/service be changed to
make it different from its competition?
18Basic Principles ofProduct or Service
Differentiation
- Feature must be quickly and easily recognizable
by customer - Must be important to and valued by customer
- Must be clearly different from competition
- Must be significantly better
196 Ways to Differentiate a Product
- 1. Providing Unique Features
- 2. Improving User Productivity
- 3. Protecting Investment
- 4. Lowering Cost of Failure
- 5. Increasing Price-Performance
- 6. Flexibility and Scalability
201. Differentiate by Providing Unique Features
- Must be truly unique, not me-too
- Breakthrough inventions are best
- Hardest and most expensive way
- Takes RD effort
- Protect with patents if you can
212. Differentiate by Improving User Productivity
- Do it faster and cheaper
- Shorten time to learn
- Make fewer errors
- Automatic error correction
- Automate several operational steps
- Make it easier to use
223. Differentiate by Protecting the Customers
Investment
- Minimize switching cost to migrate
- Avoid re-writing application software
- Extend useful life of current product
23 4. Differentiate by Lowering the Cost of
Product Failure
- Avoid downtime lost productivity
- Avoid cost of recovery
245. Differentiate byHigher Price-Performance
- Provide more value
- Increase performance
- Lower price
- Better yet, do both at same time
- Want quantified, understood benchmark
256. Differentiate by Flexibility Scalability
- Design build flexibility into product
- Provide wider range of capabilities
- Easily expand from small to large
26Product Differentiation Summary
- Many ways to differentiate products
- Try to use 2 or 3 ways on a product
- Must be
- Easily understood by customer
- Valued by customer
- A lot better.25-30
27Market Segmentation
- What is a market segment?
- Why is it important?
28What is a Market Segment?
- Set of potential customers
- Who have similar needs
- Who reference each other when buying
- Are alike in the way they
- Perceive value
- View products
- Purchase products
29Why Define a Market Segment?
- Easier to understand customer needs
- Focus whole product to a narrower set of
customer needs - Easier to become a leader in a smaller market
(Big fish in small pond) - More effective use of marketing dollars
- Generally more profitable
30PIMS Profit Impact of Marketing Strategies
- Originally a General Electric study
- Now the Strategic Planning Institute
- Studied 2600 business units since 1972
- Evaluated 28 factors related to ROI
- Determined the factor that most affected ROI was
market share
31- Firms with market shares over 40 have an avg ROI
2 1/2 times more than firms with market shares
under 10 - Increasing market share an additional 10 results
in an additional 5 point increase in ROI
32Profitability Increaseswith Market Share
- Market share of up to 10 13.2 ROI
- 10 - 20, ROI 18.0
- 20 - 30, 23.6
- 30 - 40, 24.4
- Over 40 market share, ROI 32.3
33Conclusion
- Dont enter a new market unless you can capture
25 -30 market share in a few years
34Strategy
- Define market segment small enough to allow you
to capture 25 to 30 share - Be a Big fish in small pond
- Ideal Be the only supplier in a very narrowly
defined market. - But Is the market large enough for future growth?
35Moores SegmentationTechnology Adoption Curve
- Normal population distribution of buyers
- Segmented into buying groups
- Uses standard deviation boundaries
- Based on psychographics, propensity to buy
technology based products - Its a metaphor, a model
36Consumer Markets Product Adoption
34
34
Rate of adoption
13.5
16
2.5
Late majority
Early majority
Early adopters
Innovators
Laggards
37InnovatorsThe Techies
- Technology enthusiasts they love it
- First to buy, even at high prices
- Willing to invest in learning, very tolerant
- Gatekeeper role, but minimal buying power
- Will bug the heck out of you
- Problem Not many of them to buy
38Marketing to Techies
- Product must be technically interesting
- Product must work functionally, not perfect
- Draft manuals ok
- Have them beta test
- Want to talk with techie developers
- Deliver papers and demo at conferences
- Publish in technical journals
39Early AdoptersThe Visionaries
- Want a new technology to impact their business in
a strategic manner - Want discontinuous breakthrough impact
- Goal improve business, not use technology
- Project oriented builders, not maintainers
- Anxious, champions, visible, risk takers
- Make bet their career decisions
40Marketing To Early Adopter Visionaries
- Direct sell the dream, but clearly define scope
product deliverables - Relate to their business objectives
- Have them reference other visionaries who have
bought your best salesmen - Price is secondary they want it right, complete,
quickly on time
41Early MajorityThe Pragmatists
- Want incremental improvement
- Evolutionary not revolutionary products
- Want standards, proven products, solid firm
- Cant sell them new, risky technology
- Hard to sell dreams, only reality sells
- Live with their decisions long time
42Marketing To Early Majority Pragmatists
- Proven product, based on standards, many
satisfied customers, market leadership - Want competition lower prices, alternatives
- Industry specific seminars and conferences
- Develop long term relationships
- Like one-stop shopping but slow to buy
43Late MajorityThe Conservatives
- Back side of the curve 1/3 population
- Significant opportunity for sales profits
- Technology adverse dont like change
- Want only mature whole products, fully packaged
and supported....at a low price - Most technology products they buy are sold
through retail distribution channels
44LaggardsThe Skeptics
- Last 1/6 of population 17
- Dont buy technology unless they have to
- Just now buying microwave ovens VCRs
- Not worth talking about
- Not worth me making this slide!
- Enough said....
45Market Opportunities Challenges
- 8 population cant set a digital clock
- 25 never used a computer
- 25 never programmed a VCR
- 50 of US college graduates have never heard of
High Definition TV or Interactive TV
46Tech-thusiasts Innovators Early Adopters
- Together equal 15 of US population
- Have to sell technology to them first
- 38-40 million people, urban locations
- Younger, more affluent, better educated
- 38 yrs old, 57,000/yr, two yrs college
- Read more, watch less TV
47Moores First Minor ChasmInnovators to Early
Adopters
- Have to convert technical product into a major
strategic benefit - Must enable a strategic leap forward
- Must have a single compelling application and
reason to buy - Early adopters can be sold futures, vaporware,
dreams
48Moores Major ChasmEarly Adopter to Early
Majority
- A major leap many firms never complete
- Requires a significant change in marketing and
sales strategy - Conservatives want it packaged perfectly
- Dont let visionaries reference to conservatives
a lost cause, different goals - Must provide a compelling reason to buy
49Visionaries and Pragmatists Dont Relate to Each
Other
- Visionaries
- Dont relate to industry colleagues
- More interested in technology than industry
- Minimize importance of infrastructure
- Are change agents catalysts shake things up
- Not concerned about the long term they dont
plan on being there a long time they move on
50- Pragmatists
- Plan to stay at company in industry
- Want long term relationships
- Are security conscious, risk averse
- Want solid industry references before buying
- Wont buy futures, visions, or dreams
- Take longer to sell must go through more steps
in the sales cycle
51Therefore You Cant Use the Same Marketing
Tactics
- Product positioning must stress proven product
stable, solid, main stream, industry standard - References from other pragmatists --best
- Industry press, conventions, papers are key
- Direct sales presentations must change, often
requires a different salesperson - Brochures, value proposition must change