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Chris Easingwood, Steven Moxey, and Henry Capleton
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Bringing High Technology to Market:
Successful Strategies Employed in the
Worldwide Software Industry
Chris Easingwood, Steven Moxey, and Henry Capleton
The launch stage can be critical for many new products, but particularly so for
technology-intensive ones. This study examines this key stage in a high-tech sector:
the worldwide computer software industry. Using a research instrument developed
across a number of high-tech sectors, but adapted to the targeted sector, it describes
a worldwide telephone-based survey of 300 organizations, resulting in 190 inter-
views, a response rate of 63%. It shows that five distinct and interpretable strategies
are employed: (1) alliance strategy involves forming early strategic alliances as
well as tactical alliances at the execution stage together with the development of
unique distribution channels; (2) targeted low risk attempts to reduce the risk of
adoption among identified segments by producing versions of the product specifi-
cally customized to the segments; (3) low-price original equipment manufacturer
(OEM) is the only price-driven strategy and combines low price with channel
building to OEMs who are looking for attractive price-to-performance ratios; (4)
broadly based market preparation is an early-stage strategy that concentrates on
educating the market vis-a-vis the technology and developing channels; and (5)
niche-based technological superiority uses a technologically superior product to
dominate a niche and corresponds closely to the chasm-crossing strategy expounded
by Moore and others. Regarding superior product performance, successful software
companies first of all engage in a broadly based preparation of the market but
switch to a targeted strategy at the following stages of positioning and execution,
built around superior technological performance and reduced risk. A somewhat dif-
ferent mix of strategies is adopted when the objective is superior market develop-
ment, namely opening up new markets, reaching new customers, and developing new
product platforms. Again the mix includes broadly based market preparation, this
time along with alliances. This strategy is very much about working with partners.
The broadly based market preparation strategy is key for both objectives, is long
term in nature, and avoids narrowly defined niches. It seems that starting broad
based and narrowing down, perhaps to a niche, only at a later stage when this is
clearly the appropriate thing to do, pays dividends.
Introduction
Innovation is an important determinant of wealth
creation and economic growth. Yet innovation
in the form of new products and services is for
naught unless the new products can be brought to
Address correspondence to: Chris Easingwood, Manchester Schoolof Business, Manchester M15 6PB, England. Tel.: þ 44 (0) (161) 275-6482. E-mail: c.easingwood@mbs.ac.uk.
J PROD INNOV MANAG 2006;23:498–511r 2006 Product Development & Management Association
market and successfully overcome the inevitable
hurdles to change and adoption that exist (Kim and
Mauborgne, 2000; McDonald, Corkindale, and
Sharp, 2003). That being so, the launch stage is a
critical step in this wealth creation process that begins
with the generation of an idea for a new product
and ends with commercial success. This article looks
at the launch of technology-intensive products and
identifies some successful launch strategies.
Literature
The subject of product launch probably has its origins in
the work of Cooper (1975, 1979, 1980), Cooper and
Kleinschmidt (1986), and Cooper and de Brentani
(1991) on the new product development process, in
which launch sometimes featured as one of many var-
iables, from idea generation to concept development to
firm synergy, that were included in increasingly compre-
hensive and detailed surveys to uncover the drivers of
new product success (see Montoya-Weiss and Calan-
tone, 1994 for a meta-analysis). In fact, launch was
identified early on as one of the most important drivers,
probably contributing to it becoming a separate subject
for study. Although a few years ago the literature on
new product launch might have been said to be relatively
sparse (Green et al., 1997), that is not the case now, with
the subject currently growing apace with some influen-
tial contributions (see particularly Debruyne et al., 2002;
Hultink and Hart, 1998; Hultink et al., 1997, 2000;
Langerak, Hultink, and Robben, 2004).
However, though this general increase in activity is
clear, this is not the case for the launch of technology-
intensive products (Easingwood and Harrington,
2002). Yet the launch stage for high-tech products is
likely to be especially critical. Many high-tech markets
are characterized by a winner take most mode, and the
eventual winner may not necessarily be the best prod-
uct but the one that establishes an early lead (Arthur,
1996; Schilling, 1998). Furthermore, the window of
opportunity in technology-intensive markets is likely to
be narrow as newer technology may be waiting in the
wings even as the new technology gets its one chance to
establish itself (Mohr, 2000). Fluff that chance, and
there may not be another (Easingwood and Koustelos,
2000). Rewards accrue to those who are first to see the
shape of the next emerging technological play (Arthur,
1996), such as eBay, the Internet auction site. The
present article looks at the launch of technology-inten-
sive products, choosing the computer software envi-
ronment for its empirical testing.
Few attempts have been made to take an overview
of the subject of the new product launch, partly be-
cause research into launch is scattered and partly
because it may be just one of many factors examined.
An exception is Hultink et al.’s (2000) comprehensive
examination of strategic and tactical launch variables
in both consumer and industrial markets.
Sometimes the launch event is examined more from
the perspective of the incumbent attempting to ward off
the new product than from that of the company intro-
ducing the new product (see Cespedes, 1994; Kuester,
Homburg, and Robertson, 1999). Defending companies
take actions in an attempt to protect their own position
and to reduce the new product’s impact. A few articles
manage to look at both innovator actions and incum-
bent responses (e.g., Debruyne et al., 2002; Schilling,
2003). For instance, the incumbent’s reaction to the
changed situation is dependent on the characteristics of
the new product launch (Debruyne et al., 2002).
Opinions have not been consistent regarding which
variables belong in the launch stage (Hultink and
Hart, 1998), but a common approach is to examine
the strategies a company employs using a framework
based on the marketing mix. Thus, advertising spend
may be increased, price may be reduced, or a product
may be modified (Hauser and Shugan, 1984). For in-
stance, in fast-moving consumer markets, incumbents
with nondominant share should on average reduce
BIOGRAPHICAL SKETCHES
Dr. Chris Easingwood is professor of marketing at Manchester
Business School and head of marketing and strategy. He has a
Ph.D. from the Wharton Business School and is an active researcher
in a number of areas including services marketing, financial services
marketing, marketing of technology, new product development and
product marketing. He has published more than 80 articles appear-
ing in leading international journals such as Marketing Science, In-
ternational Journal of Research in Marketing, Journal of Business
Research, Journal of Product Innovation Management, and Business
Horizons.
Dr. Steven Moxey has a Ph.D. from Oxford University and has held
senior marketing positions in technology companies including Ca-
ble & Wireless and IBM Software, where he was responsible for the
marketing management profession. Dr. Moxey has extensive expe-
rience of product development and marketing launch strategies for
global software products. He is currently managing director of Se-
rrula Ltd., a technology research and consultancy company with
research specialization in technology marketing for the telecommu-
nications and information technology industries.
Henry Capleton is an experienced marketing manager from the
software industry with international experience in Europe and the
United States. He was formerly a marketing planning manager for
IBM Software and is now a consultant with research interests in
market planning, software product development, and channels.
BRINGING HIGH TECHNOLOGY TO MARKET J PROD INNOV MANAG2006;23:498–511
499
price and advertising support, whereas those with
dominant shares should also reduce price but should
increase advertising support (Gruca, Kumar, and
Sudharshan, 1992).
Marketing mix-based approaches can be helpful, and
managers do at one level make adjustments to the com-
ponents of the marketing mix, but ‘‘in the case of a
highly innovative new product, an analysis of the mar-
keting mix adaptations may provide too narrow a per-
spective’’ (Debruyne et al., 2002, p. 168). Some studies
examine the effect of variables that represent the com-
bined effect of a number of factors in summarized form,
such as the magnitude of marketing investment or com-
petitive advantage (e.g., Green and Ryans, 1990). Use-
ful as these studies undoubtedly are, it is also useful to
take the level of analysis down to consideration of the
actions and tactics that managers actually use.
An example is the market preparation/targeting/
positioning/execution framework of Easingwood and
Koustelos (2000), which is based on interpretation of
qualitative work carried out with high-tech marketing
and product managers. The launch program is divided
into stages: (1) market preparation, in which markets
are readied for the product’s arrival; (2) targeting, in
which promising sectors are identified; (3) positioning
to achieve competitive advantage; and (4) execution,
in which the market is attacked and includes direct
actions to build sales.
Activities undertaken in the first three stages are
mostly strategic, in the sense that they involve high
commitments of resources, take some time to work
through, and are difficult to reverse (Debruyne et al.,
2002). They are also strategic in the sense that they
largely occur prior to launch (Hultink et al., 2000).
Activities undertaken in the final execution stage are
mostly tactical in that they belong to the product’s
commercialization stage and can be modified at a later
stage in the product’s launch (Hultink et al., 1997).
High technology is no longer confined to the tra-
ditional sectors of computer hardware and software,
telecommunications, and consumer electronics but
has invaded many other sectors that rely on technol-
ogy to enable them to deliver improved customer so-
lutions, for instance service industries (Mohr and
Shooshtari, 2003).
Purpose
The present article examines the launch event in a
high-tech environment from the perspective of the
company introducing the new product and attempting
to secure good performance. It studies the use and
effect of a number of tactics employed to launch the
new product. It attempts to understand which tactics
are natural bedfellows. In other words, which tactics,
when used together, can be expected to complement
and support one another? In addition, this article
looks at the relationship, if any, between the mix of
tactics employed and the resulting performance.
In summary there are three main objectives: (1) to
investigate whether any particular combinations of
launch tactics are frequently employed; (2) to examine
the launch tactics to see if they reinforce one another,
forming strategies with coherent aims—in other
words, to identify clearly definable combinations of
tactics, called strategies; and (3) to identify strategies
associated with enhanced performance.
Implicit in this is an examination of the extent to
which the stages build or do not build on one another.
Thus, a secondary objective is to examine the strate-
gies that emerge to see whether they are formed from
tactics from all stages or whether the stages them-
selves form the strategies. In the present authors’ ex-
perience, mangers think in terms of the stages, so it is
useful to see if the strategies actually employed con-
form to this perspective.
Companies in the process of bringing new techno-
logy to market may have invested considerable re-
sources and time in doing so (Urban and Hauser,
1993); in addition, more just than the financial returns
from that single product may be riding on the out-
come. Every new product launch by a high-tech
company has the potential to consolidate or under-
mine its reputation for leading-edge work depending
on the success enjoyed. For instance, high-tech
companies need the ongoing support of their chan-
nels of distribution to support their products and
services and to present them effectively to end users.
Successful launches can increase the levels of support
from the channels, and unsuccessful launches can
do the opposite. In such cases getting the launch
stage right can assume major importance. Deriving
a better understanding of the launch strategies that
work best would thus seem to be a worthwhile
objective.
Methodology
Development of the Research Instrument
Based on many discussions with practitioners in
technology-based markets, it was concluded that
500 J PROD INNOV MANAG2006;23:498–511
C. EASINGWOOD, S. MOXEY, AND H. CAPLETON
managers in technology-based markets think in terms
of actions taken (e.g., circulating information in ad-
vance, supplying original equipment manufacturers
[OEMs], communicating technological advantages,
reducing the risk of adoption, running trial programs,
working effectively with channel partners). These and
others form the bricks of high-tech product launches
from which the strategies are constructed. It is there-
fore sensible to examine the consequences of the ac-
tual actions employed. Thus, although others have
adopted the marketing mix with success when re-
searching the marketing of new products, a frame-
work that has been customized to the high-tech
marketplace would provide a useful perspective.
Such a framework already exists composed of a
number of launch tactics derived from grounded work
with marketing and product managers working in
several different high-technology sectors (see Easing-
wood and Koustelos, 2000) and has been successfully
employed across several high-tech sectors—eight
different sectors that include pharmaceuticals, com-
puters, automation, and telecommunications. This
framework was adopted, although it had first to be
adapted to the particular high-tech sector to be re-
searched—the worldwide computer software indus-
try—for a number of reasons: The framework had not
been subjected to a second scrutiny by high-tech man-
agers, needed to be updated given the speed with
which high-tech sectors evolve, and possibly needed
adapting from its general high-tech origins to the spe-
cific software sector to which it would be applied.
Eight managers from the sponsoring high-technol-
ogy company agreed to examine the research instru-
ment in detail, five face to face and three over the
telephone, which resulting in the following changes:
� Expansion/clarification: The precision of the ter-
minology used was improved in some statements.
For instance, the market preparation option ‘‘ed-
ucate the market’’ was rephrased as ‘‘educate the
market to understand new uses’’; the execution
option ‘‘concentrate on a particular application’’
was made clearer as ‘‘concentrate on a niche,’’
which also has the advantage of better expressing
the important ‘‘kingpin’’ strategy (Moore, 1998,
1999).
� Restatement: Some options were thought to be too
specific and were reexpressed more generally. For
instance, the market preparation option ‘‘coopera-
tion/licensing/alliances’’ was restated as ‘‘form stra-
tegic alliances.’’ Some phrasing lacked clarity, so,
for instance, the positioning option ‘‘emphasize a
safe bet’’ was reexpressed as ‘‘emphasize low risk.’’
� Combine stages: It was thought that the second
and third stages, targeting and positioning, be-
longed together. Planning the target segment and
the claimed position in that targeted segment are
normally thought through in one step. Thus, the
second and third stages were combined.
� Removal: Some statements, such as the targeting
options ‘‘target competitors,’’ ‘‘customers,’’ and
‘‘target conservatives,’’ were considered to be too
specialized for the targeted market and so were
dropped.
� Addition: Three new tactics were added. An often
used execution tactic in the software industry
known as versioning is to modify the product to
suit different segments, expressed as ‘‘offer differ-
ent versions targeted at different buyers,’’ and this
was included. Another option, ‘‘focus on channel
partners,’’ was added to the execution options to
capture the later stage efforts to motivate the
channel partners. Also added to the execution
stage was ‘‘use reference sites,’’ as this is a fre-
quently used option in the surveyed market.
The outcome was a clearer and more relevant re-
search instrument (Table 1). This modified framework
provides the list of measurement items used to identify
the launch strategies.
Telephone Survey
The high-technology sector chosen for the study was
computer software. Software has the characteristics
expected of a high-tech sector (Mohr, 2001): a high
degree of scientific and technical uncertainty; new
technology with the potential to make old technolo-
gy obsolete and to do so rapidly; high or very high
demand for new technologies often from new players;
customer uncertainty over the potential value of the
innovation; and a high percentage of sales invested in
research and development (R&D). Leading players
such as Microsoft, IBM, Oracle, and SAP are ac-
knowledged high-tech companies.
The research was targeted at software companies
throughout the world with the requirement that they
develop, produce, and market their own software
products. A database, ‘‘Software 500,’’ of the top
500 software companies in the world produced by
Software Magazine was obtained. The plan was to
produce 200 completed questionnaires.
BRINGING HIGH TECHNOLOGY TO MARKET J PROD INNOV MANAG2006;23:498–511
501
The use of face-to-face interviews was ruled out
on the grounds of expense, since the targeted software
companies were located throughout the world.
Also ruled out was a mailed survey, as it would
most likely result in a low level of response. It was
therefore decided to use telephone interviews
because the research instrument was straightforward
enough to be explained over the phone, the cost
would be acceptable, and the response rate likely to
be high. Telephone interviews would be conducted
with senior product, brand, or marketing managers
responsible for the marketing of one or more software
products.
The questionnaire was successfully telephone pre-
tested for clarity, nonambiguity, and completeness
with 10 software product managers from the support-
ing high-tech company. Contact was then made with
the software companies by e-mail and telephone to
screen the companies as well as seeking cooperation.
Excluded from the sample were companies producing
software products that are so closely related to pro-
prietary hardware that the marketing and sales of the
software is inextricably linked to that of the hardware,
for example, proprietary operating systems or disk
storage management software. Also excluded from
the sample were companies producing software that is
individually developed and charged for as part of a
service contract—in other words, bespoke software or
software that is not packaged and marketed inde-
pendently.
A total of 190 interviews were completed out of 300
organizations contacted, which gave a response rate
of 63%. The high response rate figure was credited to
three factors: the high reputation in the sector of the
research company employed to do the interviews; the
efforts made to secure full participation; and the high
interest in the topic under investigation. The majority
of cooperating companies was based in the United
States, followed by the United Kingdom (Table 2a).
Some European and American firms were contacted
at the U.K. office; all interviews were conducted in
English. Checks on the types of company, on size, on
geographic distribution, and on standard industry
classification (SIC) categories indicated that the sam-
ple could be considered representative of the top 500
companies in the software industry. Most respondents
held a worldwide responsibility for the marketing of
their products (Table 2b).
Information was sought on the number of products
marketed by the business unit in question. Then the
interviewees were asked if they managed more than
one product. If so, they were asked to declare which
recently launched product or product family is the
most important to their organization in terms of
current and potential sales and profits. The remain-
der of the questionnaire was then focused on that one
product. Thus, only one product, or product family,
was investigated per interview even if the interviewee
had broader responsibility. The respondents were
Table 1. Launch Tactics
Market PreparationMP1: Form strategic alliancesMP2: Supply to OEMs to incorporate in other productsMP3: Provide clear product information to the marketMP3: Educate the market to understand new usesMP4: Create unique distribution channels
Targeting and PositioningTP1: Target high-value usersTP2: Emphasize low priceTP3: Emphasize technology superiorityTP4: Emphasize low riskTP5: Offer different versions targeted at different buyers
ExecutionE1: Use opinion leadersE2: Have trial programs (e.g., demonstrations, ‘‘try and buy’’)E3: Concentrate on nichesE4: Cultivate a winner image (i.e., winning mindset)E5: Focus on channel partnersE6: Exploit tactical alliancesE7: Use reference sites
Table 2a. Country Location of Respondent
Distrbution of Respondents by Country
Frequency Percent Cumulative Percent
United States 130 68.4 68.4United Kingdom 48 25.3 93.7Canada 4 2.1 95.8France 3 1.6 97.4Germany 2 1.1 98.4Israel 2 1.1 99.5Sweden 1 0.5 100.0
Total 190 100.0
Table 2b. Scope of Responsibility of Interviewee
Frequency Percent
Worldwide 113 59.5Region 36 18.9Country 41 21.6
Total 190 100.0
502 J PROD INNOV MANAG2006;23:498–511
C. EASINGWOOD, S. MOXEY, AND H. CAPLETON
asked to indicate the importance of each tactic in the
launch of the selected software product on a 1 to 5
scale, with 1 being of no importance and 5 being very
important.
Also collected was information on the success of
the product using five measures of financial and sales
success. However, the knowledge and experience
gathered during the new product development proc-
ess can be as important as the project itself (Bowen et
al., 1994), including the platform created for subse-
quent new products, perhaps even families of prod-
ucts (Meyer and Utterback, 1993). Companies that do
not develop new products and reinforce their core
competencies soon fall behind the technology frontier
(Schilling, 1998). Therefore, in addition to the five fi-
nancial measures, four measures of success were add-
ed to capture the follow-on benefits of the new
product project: (1) platform for further new prod-
ucts; (2) opening up access to new markets; (3) impact
on image; and (4) attracting new customers (see Grif-
fin and Page, 1993, for a review of success and failure
product development measures). In addition, some
background information was collected.
Results
Launch Strategies
The data on the importance of each tactic in the mar-
keting of the software products were then subjected to
principal components factor analysis: varimax rota-
tion and Kaiser normalization (Table 3). The scree
plot for the eigenvalues has a longish tail; accordingly
a cut-off level of 1.1 was set for the eigenvalues to
prevent the inclusion of too many factors.
This resulted in five factors explaining 52% of the
original variance, each one a particular combination
of launch tactics.
The first factor has high loadings on those tactics
that involve working closely with other players in-
volved in bringing technology-based products to mar-
ket. Particularly important are creating formal
alliances, both strategic at the market preparation
stage and tactical at the execution stage; creating
unique distribution channels at the preparation
stage and then focusing efforts on the channel
partners at the execution stage; and developing
Table 3. Marketing Tactics and Factor Loadings
Rotated FactorLoadingsa
Percent VarianceExplained Eigenvalues
Factor 1: Alliances 13.977 2.376MP1: Form strategic alliances .730MP5: Create unique distribution channels .483E5: Focus on channel partners .724E6: Exploit tactical alliances .831E7: Use reference sites .409
Factor 2: Targeted Low Risk 9.984 1.697TP4: Emphasize Low Risk .492TP5: Offer different versions targeted at different buyers .633E1: Use opinion leaders .536E2: Have trial programs (e.g., demonstrations, ‘‘try and buy’’) .575E4: Cultivate a winner image (winning mindset) .448
Factor 3: Low-Price OEM 9.970 1.695MP2: Supply to OEMs to incorporate in other products .419MP5: Create unique distribution channels .519TP1: Target high-value users � .548TP2: Emphasize low price .704
Factor 4: Broadly Based Market Preparation 9.789 1.664MP2: Supply to OEMs to incorporate in other products .549MP3: Provide clear product information to the market .676MP4: Educate the market to understand new uses .723
Factor 5: Niche-Based Technological Superiority 7.924 1.347TP3: Emphasize technology superiority .774E3: Concentrate on niches .565
aCut-offs: 0.4.
BRINGING HIGH TECHNOLOGY TO MARKET J PROD INNOV MANAG2006;23:498–511
503
mutually beneficial relationships with customers who
then provide reference sites for the new products. This
combination of tactics is thus named the alliance
strategy.
The second factor represents a later stage strategy,
with no market preparation activities. It has two com-
ponents. The first is an attempt at lowering the cus-
tomer’s perceived risk of adoption using a number of
tactics: emphasizing low risk; attempting to be seen as
the winner, which, if it is successful, convinces cus-
tomers that the software is safe to adopt; offering tri-
als so customers can test the product for themselves;
offering guarantees; and gaining the support of influ-
ential opinion leaders whose recommendations are
seen as proof the product is adoptable. The second
component of the strategy involves targeting, partic-
ularly by producing versions of the product that have
been prepared specifically for the targeted sectors.
This strategy is thus summarized simply as targeted
low risk.
The third strategy has a clear, narrowly defined
profile. It is built around low price and places more
emphasis on this tactic than any of the other strate-
gies. There is an emphasis on supplying OEMs and on
creating unique distribution strategies. Consistent
with its low price stance, it is very much not about
serving high-value users. This is a low-price OEM
strategy.
The fourth strategy is very much based on an em-
phasis on the early-stage tactics of market prepara-
tion. It concentrates on providing the market with
information and indeed on educating the market,
which can be a long-term task. It seeks to develop
unique channels particularly to OEMs and is broad
based in the sense that it avoids narrowly defined
niches. This strategy is thus dubbed broadly based
market preparation.
The fifth strategy is tightly built around a superior
technological advantage aimed at well-defined niches
and is thus called a niche-based technological superi-
ority strategy.
Five distinct launch strategies have been identified.
The first two objectives of this work are accomplished
namely demonstrating that software companies use
distinct combinations of launch tactics that are clearly
defined and highly interpretable and hence are
deserving to be called strategies.
The frequency of use of each strategy was estimated
by counting the number of times each strategy en-
joyed the highest score among all strategies for each
firm (Table 4). The strategies were fairly uniformly
popular, with the low-price OEM strategy heading the
list, followed by niche-based technology superiority.
Performance
To address the final objective it was necessary to
introduce one or more measures of success. As
explained, respondents were asked to estimate the
chosen product’s performance on nine measures us-
ing a 1–5 scale. The data were subjected to a principal
components factor analysis, yielding a two-factor
solution, explaining 28% and 21%, respectively, of
the variance (Table 5).
As can be seen, two distinct factors emerge: product
performance, composed of sales, share, and profita-
bility measures; and market development, which em-
phasizes longer-term development variables such as
new markets, image, and new product platforms.
Product performance. To investigate how the five
factors influence product performance, the cases were
divided into three equal groups based on the product
performance measure of success. The high scoring
group was then contrasted with the low scoring
group, a commonly used practice (e.g., Hultink and
Hart, 1998), using discriminant analysis, or stepwise
variable selection using Wilks’s Lambda.
The discriminant function is
�0:047þ 0:519 � targeted low risk
þ0:397 � broadly based market prep
þ0:418 � niche-based technological superiority:Table 6 shows the percentage of cases correctly
classified using this function and also using the cross-
validation approach; each case is classified by the
function derived from all cases other than that case. A
total of 66.9% of the original grouped cases and
65.4% of cross-validated grouped cases were correct-
ly classified. Lehmann’s one-tailed test statistic z is
significant at the 1% level, confirming this is not a
random assignment.
Table 4. Launch Strategy Frequency
Highest Scoring Launch Strategy Count Percent
Alliances 35 18.42Targeted Low Risk 38 20.00Low-Price/OEM 47 24.74Broad-Based Market Preparation 30 15.79Niche Technological Superiority 40 21.05
190 100.00
504 J PROD INNOV MANAG2006;23:498–511
C. EASINGWOOD, S. MOXEY, AND H. CAPLETON
The third objective was to see if particular combi-
nations of strategies deliver enhanced performance.
For product performance it seems that this is the case.
To secure product performance—that is, product
sales, growth, share, and profitability—it seems that
successful software companies first of all engage in a
broadly based preparation of the market but switch to
a targeted strategy at the following stages of position-
ing and execution built around superior technological
performance and risk reduction.
Market development. In the same way as product
performance, the sample was divided into three
equal groups based on the market development per-
formance scores, and the high and low groups were
compared.
The discriminant function is
1:573þ 0:713�allianceþ 0:623�broadly based market preparation:
Table 7 shows the percentage of cases correctly
classified. The discriminant function correctly classi-
fies 73.5% of the cases, with 72.1% of cross-validated
grouped cases correctly classified. Lehmann’s one-
tailed test statistic z is significant at the 1% level.
The question posed by the third objective is whether
particular combinations of launch strategies deliver
superior performance. The answer, as for product
performance, appears also to be in the affirmative
for market development. Market development with its
focus on opening up new markets, reaching new cus-
tomers, improving image, and managing one new
product launch so as to increase the likelihood of fur-
ther launches is long term in its orientation. It seems
that the potential for market development is driven by
alliances and broadly based market preparation,
which is also significant for product performance.
This strategy is very much about working with
Table 5. Measuring Product Success and Factor Loadings
Rotated FactorLoadingsb
Percent VarianceExplained
CumulativePercent Variance
Explained
Factor 1: Product Performance 28.2 28.2Your products’ growth rate exceeds objectives. .741Your product’s growth rate exceeds the market growth. .680Total sales of the product are very high. .760The product has large market share. .601The profitability of the product exceeds objectives. .699
Factor 2: Market Development 21.1 49.3The product has helped open up new markets. .740The product has attracted significant new customers to the company. .734The product and its performance has positive impact on the image ofthe company.
.706
The product gives the company a platform on which to introduce newproducts.
.416
aCronbach’s alpha: factor 15 0.76; factor 25 0.64.bCut-offs: 0.4.
Table 6. Discriminant Analysis for Product Performance
PredictedGroup
Membership
TotalLow High
Original Count Low 42 26 68High 19 49 68
Percent Low 61.8 38.2 100.0High 27.9 72.1 100.0
Cross-Validated Count Low 42 26 68High 21 47 68
Percent Low 61.8 38.2 100.0High 30.9 69.1 100.0
Table 7. Discriminant Analysis for Market Development
PredictedGroup
Membership
TotalLow High
Original Count Low 50 18 68High 18 50 68
Percent Low 73.5 26.5 100.0High 26.5 73.5 100.0
Cross-Validated Count Low 48 20 68High 18 50 68
Percent Low 70.6 29.4 100.0High 26.5 73.5 100.0
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505
partners: strategic alliances, OEMs, unique distribu-
tion channels, channel partners, and tactical partners
at the execution stage. And a key part of working with
these partners is that of informing and educating
them. It was considered possible that some other var-
iables might affect the employment of the launch
strategies. Therefore the effects of three independent
variables were investigated: newness of market served,
innovativeness of technology, and level of competition.
The procedure used was to classify the sample into
low and high groups according to the independent
variable and then to use an independent samples t-test
to look for significant differences in the mean launch
factor score for each group.
Discussion
Strategies
The current research identified five distinct strategies
consistently employed by companies in this high-tech
sector.
The first strategy, alliances, is hardly a surprise
given that it is widely practiced in many sectors (Vyas,
Shelburn, and Rogers, 1995), with the top 500 global
businesses averaging 60 major strategic alliances each
(Dale, Kale, and Singh, 2001). Strategic alliances are
not relationships at arms’ length but instead involve a
‘‘commitment to cooperation along some important
competitive dimension’’ (Hill, 1997, p. 12). They are
particularly prevalent among technology-led compa-
nies looking for complementary technologies as well
as leveraging marketing resources and attempting to
establish industry standards. Alliances help compa-
nies reduce the technological uncertainty that is char-
acteristic of high-tech markets and may reduce
potential confusion in the market place (Moriarty
and Kosnik, 1989), are particularly appropriate
when faced by highly capable competitors (Hill,
1997), and are extensively used in spite of the associ-
ated risks (Doz and Hamel, 1998). They are some-
times formed when a competitor is also at a fairly
advanced stage in developing a competing technology
(Hill, 1997). Companies try to establish industry
standards by licensing technology to try to create
the platform around which product categories can
be built (Cusumano and Gawer, 2004). Famously this
is what Microsoft did with Windows. Sony made it
relatively easy for developers to produce games for
Playstation, leading to a primary position in the video
game console market (Schilling, 2003). A platform
enables others to add value to the product category
and to create network effects so that nonadopters are
distinctly disadvantaged. Nearly a quarter of Ama-
zon’s sales are now generated on behalf of third-party
sellers (Nuttal and Waters, 2004, p. 17). High-tech
products rarely stand alone but instead exist in mini-
ecologies that ‘‘support and enhance them’’ (Arthur,
1996, p. 105). Companies should offer attractive li-
censing and distribution policies to attract third-party
developers and distributors and also should ensure
that all partners receive a fair reward for their partic-
ipation (Schilling, 2003).
As the strategy indicates, alliances are also forged
with the channels of distribution, who, given a stake
in the future of the technology, may support the tech-
nology more actively than otherwise they would.
The second strategy, targeted low risk, attempts to
reduce the risk of adoption in several ways for a tar-
geted segment. It is the strategy that places most em-
phasis on versioning and is likely to be attractive to
large companies that have made a significant invest-
ment in an existing product platform and need to lev-
erage that investment. They have the resources and
expertise that allows them to tune the product
through a series of new versions; good examples are
Microsoft Windows products, Oracle database soft-
ware, and IBM WebSphere. The rationale also is that
larger companies have established market positions
and customer bases that are susceptible to this kind of
incremental marketing strategy.
Smaller companies, with smaller investments and
assets, might be more likely to create a number prod-
uct in response to an opportunity. The hypothesis that
larger companies are more likely to benefit from the
versioning strategy than smaller companies is tested in
Table 8, which compares the prevalence of low and
high use of the versioning strategy against company
size. The chi square test shows a significant relation-
ship at a 5% confidence interval. Therefore, as
Table 8. Use of Versioning Strategy by SoftwareCompany Size
Company Size
Versioning Strategy
Low Use (%) High Use (%)
Number of Employees o100 56.30 43.80100–500 27.40 72.60501–5000 32.60 67.4045 5001 30.80 69.20
Total 35.30 64.70
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C. EASINGWOOD, S. MOXEY, AND H. CAPLETON
hypothesized, larger companies (i.e., more than 100
employees) are more likely than smaller companies
(i.e., less than 100 employees) to favor the versioning
strategy.
Products that have been modified to meet the needs
of the served market are expected to win higher mar-
ket share (Langerak, Hultink, and Robben, 2004;
Ryans, 1988). Creating an early winner image through
the use of heavy initial support and advertising is one
way to help create the perception of a high-installed
base leading to a rapid growth in sales and high actual
installed base (Schilling, 2003). Purchasers seek the
reassurance of buying the accepted product. Bundling
a new high-technology product with existing technol-
ogy may reduce perceived risk (Sarin, Sego, and
Chanvarasuth, 2003).
The third strategy, low-price OEM, has a clear
profile. It is the only price-driven strategy and com-
bines price with channel building to OEMs, who care-
fully manage the quality and price of all components.
Essentially OEMs are looking for attractive price-to-
performance ratios; hence, the high emphasis is on
low price. This is a specialized OEM strategy and is
most often number one among the sample companies
(Table 4). This may not be a typical finding for some
other technology markets. For instance for successful
products in industrial markets, often with a techno-
logically based product advantage, a skimming price
is more typical (Hultink et al., 2000), as it is also for
products with high advantage (Hultink and Hart,
1998). However, discounting is also used (Arthur,
1996, p. 105): For instance, it may sometimes pay
firms to offer products at or even below cost at the
time of launch to accelerate adoption in the expecta-
tion that there will be compensating increased sales of
either the core technology or of complementary goods
once the technology is established, as in the video
game market (Schilling, 2003, p. 22).
The fourth strategy, broadly based market prepa-
ration, is longer term in nature. It attempts to educate
the market, which can take time and is expensive. In
addition, it seeks to develop unique channels, which is
not normally accomplished rapidly. By adopting a
broad-based outlook, in the sense that it avoids nar-
rowly defined niches, this also fits in with a longer-
term orientation: Start broad based, and narrow
down only when this is clearly the appropriate thing
to do. Niche orientation comes later (Millier, 1999).
Long-term market preparation is normally seen as
the preserve of companies that have dominant posi-
tions and market share. They may then be in a posi-
tion to benefit from patient nurturing of the market. A
company facing an erosion of its dominant position is
likely to find that the time available for market prep-
aration between product announcement and product
availability will have to shorten or demand will tend
to be filled by competition.
Finally, the fifth strategy, niche-based technologi-
cal superiority, uses a technologically superior prod-
uct to dominate a niche. This strategy places the most
emphasis on technological superiority. Competition
at the early stages of high-growth markets is more
likely to be technologically based than marketing
based (Kuester, Homberg, and Robertson, 1999).
This is the route to the creation of new products
that are technologically differentiated, that have no
direct customers, and that stake out fundamentally
new market space (Kim and Mauborgne, 1999). Rad-
ical technological innovation is the recommended
route to break into an industry dominated by an en-
trenched standard (Schilling, 2003). Niche strategies
are more likely to be used where the levels of product
advantage are high (Hultink and Hart, 1998). It has
also been noted that technologies that ultimately be-
came widely diffused were first incubated in a rela-
tively isolated niche (Adner and Levinthal, 2002).
This strategy can be compared to the strategy pro-
posed by Moore (1998, 1999) for new technology in-
troduction. He argued that initial sales might
be promising as some visionaries adopt, but this can
be deceptive as sales then start to languish. They hit
the chasm. The situation is rescued by developing a
complete product for a key segment or niche, resulting
in sales lift-off and domination of the chosen niche.
The fifth strategy, with its emphasis on the develop-
ment of a product with superior benefits for a targeted
niche, exactly represents the chasm strategy—possibly
the first time it has been identified empirically in a
large sample of companies. (Moore’s books are said
to be required reading in high-tech companies
[Dhebar, 2001]). Neither is the fifth strategy incom-
patible with strategies used for disruptive techno-
logies, namely ones that offer a different and
initially less-attractive mix of attributes than those
of prevailing technologies (Bower and Christensen,
1995; Christensen, 1997). Disruptive technologies are
likely to be rejected by mainstream customers, and so
companies must turn to selected niche segments that
are prepared to respond to the new mix of attributes
(Dhebar, 2001).
The chasm strategy to escape the chasm, or saddle,
results in a strong position in the first segment, which
BRINGING HIGH TECHNOLOGY TO MARKET J PROD INNOV MANAG2006;23:498–511
507
provides the platform—resources, experience, invest-
ment in R&D—to attack a related segment in exactly
the same way so that a strong position is also
achieved in that segment. This provides a stronger
platform for further success (Easingwood and Har-
rington, 2002; Goldenberg, Libai, and Muller, 2002).
This is also what happens with disruptive strategies.
Domination of the outsider segment provides the
platform from which to base a return to attack, the
mainstream markets that initially so readily rejected
the disruptive technology (Bower and Christensen,
1995), this time with improved or lower-priced tech-
nology.
It has been shown that new industrial products are
more likely to be targeted at niches than are new con-
sumer products (Hultink et al., 2000) and that indus-
trial niche innovators enjoy above-average success
(Hultink et al., 1997). In addition, a niche strategy
for a new industrial product is less likely to elicit a
competitive reaction than a more broadly based strat-
egy (Debruyne et al., 2002).
Notice that two of the strategies—targeted low
risk and niche-based technological superiority—are
focused or targeted strategies supporting one of the
core ideas of the high-tech literature (Adner and
Levinthal, 2002; Moore, 1998; Moriarty and Kosnik,
1989); only one strategy is broadly based—strategy
four—broadly based market preparation—but this is
at the initial market preparation stage when many
companies will try to retain as wide a range of options
as is possible.
Performance: Product Performance
The combinations of strategies associated with supe-
rior product performance are targeted low risk,
broadly based market preparation, and niche-based
technological superiority. This can be summarized
as a strategy for a technologically superior product
that begins with preparation of the market followed
by targeting one or more niches, customizing the
product to those niches, and making adoption easy
by reducing the risk of adoption. Moore (1998)
advocates a similar change from a broad marketing
strategy to a niche strategy to successfully cross the
chasm. Firms must target specific niche segments
and focus effort to deliver the complete solutions to
make sales.
This strategy deemphasizes the creation of new dis-
tribution channels, which is associated with the
alliance and targeted low risk strategies. This is a
low-risk, sound strategy, not adventurous or even
conservative. It is not inconsistent with the strategic
launch strategy found by Hultink et al. (2000) to in-
crease the chances of a successful introduction of a
new industrial product. They found that industrial
firms actually achieve more success when they use in-
novation to increase penetration of existing markets
rather than by adopting more adventurous strategies
that try to use innovation to open up new markets, as
companies are sometimes prone to do.
Neither is this strategy short term only, because the
intention is to use the success in the targeted segments
to achieve success across wider swathes of the market
(Adner and Levinthal, 2002). The sales, share, and
profitability achieved in a relatively narrowly defined
part of the entire market provide the basis for more
broadly defined success over the longer term.
Performance: Market Development
The strategies associated with the market develop-
ment of new opportunities are alliances and broadly
based market preparation. It seems that the way to
develop new opportunities (e.g. new markets, new
customers) is to form alliances—early and strategic,
late and tactical—and to focus on all market devel-
opment activities.
This strategy is very much about working with and
informing and educating partners (e.g. strategic alli-
ances, OEMs, channel partners). It is a powerful ex-
ample of what has been called the third-party model
of business, in which business is driven by the com-
pany’s channels and its partners (High, 2005). Win the
channels, and inform and educate them; the like-
lihood is that opportunities will materialize. This is
the long-term view of market opportunities. The com-
pany with a good position in the channel will be
strongly positioned to participate in the longer-term
development of the market.
Notice that the strategy low-price OEM is not as-
sociated with either product performance or market
development success. It seems that, for software, this
kind of low-price strategy does not normally lead to
success, which must be disappointing, given it is the
most popular strategy.
Conclusions
The exploratory work reported here has identified five
launch strategies used in a high-tech environment.
508 J PROD INNOV MANAG2006;23:498–511
C. EASINGWOOD, S. MOXEY, AND H. CAPLETON
These strategies are defined, uniquely for the launch
literature, in terms of the actual actions employed.
Yet this is what high-tech companies do. Further-
more, the identified strategies are, to varying extents,
mixtures of both tactical and strategic actions. This
seems to offer empirical support for treating strategies
in this way. Launch strategies do have both tactical
and strategic components. Certainly when tactical and
strategic launch actions were treated separately in one
study, the effects they had on performance were less
clear cut. Launch tactics were found to be associated
with performance but launch strategies were not
(Langerak, Hultink, and Robben, 2004).
An important question is to what extent do launch
stages build on one another? Four of the five strate-
gies identified combine tactics from more than one
stage. Only one strategy, broadly based market prep-
aration, is composed of tactics from one stage: the
preparation stage. Thus, although managers think in
terms of stages, they actually seem to put together se-
lections of tactics from different stages to produce ef-
fective strategies. Logic suggests that tactics selected
from the different stages will be employed sequenti-
ally, though this theory has not been explicitly tested.
The software industry is well known for its occa-
sional use of vaporware strategies—notorious strate-
gies in which a company announces a product that
does not currently exist and that sometimes does not
even have any product development plans. The pur-
pose of the vaporware strategy is to hold off compe-
tition until real products can be readied for market.
Where, if anywhere, do vaporware strategies fit
among the five proposed strategies? This strategy is
surely an extreme example of market preparation by
early announcement. It is an attempt to mold market
opinion. Most commentators would not regard
vaporware strategies as legitimate. They should per-
haps be labeled as market deception strategies rather
than market preparation strategies.
The approach used has been at the product level in
one sector: the worldwide software market. The
study sample represents nearly 40% of the total
population of firms in the Software 500. Given the
concentrated nature of the software industry this is an
even larger proportion by revenue. The factor analysis
described here is exploratory, but given the large sam-
ple size it is reasonable to assume that the results and
conclusions are confirmed for the Software industry.
It would clearly be useful to repeat this study
across other industries such as life sciences, telecom-
munications, and information technology hard-
ware to test the wider validity of the theory across
the entire high-technology sector. As a result, find-
ings are not likely to be skewed by cross-industry
factors.
However, there are limitations. First, the work uses
a telephone survey methodology with one key re-
spondent and is thus subject to problems such as
post-hoc rationalization, social desirability answering,
and common method variance problems, since both
the dependent and independent variables are being
measured from the same respondent. The fact that
telephone interviews were used, not a mailed survey,
carried out by experienced researchers in technology-
based markets did in part help reduce the impact of
these potential biases. The problem of common meth-
od variance, which is ubiquitous, can be only partially
addressed by statistical methods; it is far better to
look for procedural or design remedies (Podsakoff
and Organ, 1986). However, collection of information
on the dependent variables from another source
would have significantly increased the cost or reduced
the sample size and would not necessarily have been
effective, as the second source would have been drawn
from the same management group as the first.
In addition, the research did not attempt to incor-
porate the intricacies of action and counteraction. In-
stead it focused on building up strategies formed from
the basic building blocks of management action,
showing how these strategies correspond to consist-
ent programs of action and are correlated with meas-
ures of performance. Future work should attempt to
retain this level of detail and also should address some
of the competitive issues, for although the intention
may be to create entirely new market space (Kim and
Mauborgne, 1999) many new products do not. Two
thirds of new industrial products can expect to face a
response by existing companies (Debruyne et al.,
2002). Thus, most new products will come up against
incumbents and can expect them to act to protect
market share and profits. Kuester, Homburg, and
Robertson (1999) found that 93% of companies re-
acted in some way to the entry of a new competitor;
Gatignon, Robertson, and Fein (1997) found that
90% reacted, although it is encouraging to note that
the more innovative the new entry, the longer it takes
for an incumbent to retaliate (Kuester, Homburg, and
Robertson, 1999). The implication of this latter ob-
servation is that innovative companies must create a
culture of product innovation so that competitors are
constantly trying to catch up (Chandy and Tellis,
2000; Chandy, Prabhu, and Kersi, 2003).
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509
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